A situation where an expansionary monetary policy pursued by a central bank does not succeed in stimulating its domestic economy. The liquidity trap phrase was used by British economist John Keynes to describe a situation where interest rates were so low that expectations of their impending rise kept investors from wanting to buy or hold bonds. In modern use, the phrase usually refers to a situation where the nominal interest rate approaches zero, making further cuts difficult.
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statement of cash flows method
collateralized bond obligation (CBO)
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