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CBSE Class 12-commerce Answered

What is meant by liquidity trap?
Asked by Topperlearning User | 18 Apr, 2016, 09:06: AM
answered-by-expert Expert Answer

The speculative demand for money becomes infinitely large or elastic when the rate of interest goes below a critical minimum level i.e. a level below which people prefers to hold idle cash balance. It is the unlimited preference for the idle cash balance when the rate of interest falls much below the normal level. This situation is called liquidity trap.

Answered by | 18 Apr, 2016, 11:06: AM
CBSE 12-commerce - Macroeconomics
Asked by Topperlearning User | 18 Apr, 2016, 09:06: AM
ANSWERED BY EXPERT ANSWERED BY EXPERT
CBSE 12-commerce - Macroeconomics
Asked by Topperlearning User | 18 Apr, 2016, 09:06: AM
ANSWERED BY EXPERT ANSWERED BY EXPERT
CBSE 12-commerce - Macroeconomics
Asked by Topperlearning User | 18 Apr, 2016, 09:06: AM
ANSWERED BY EXPERT ANSWERED BY EXPERT
CBSE 12-commerce - Macroeconomics
Asked by Topperlearning User | 18 Apr, 2016, 09:06: AM
ANSWERED BY EXPERT ANSWERED BY EXPERT
CBSE 12-commerce - Macroeconomics
Asked by Topperlearning User | 18 Apr, 2016, 09:06: AM
ANSWERED BY EXPERT ANSWERED BY EXPERT
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