Question

Do you think the Federal Reserve was ever concerned about facing a liquidity trap? Yes or no? Discuss.

Answer 1

Yes Fed is worried about liquidity trap in light of the fact that a circumstances in which winning loan fees are low and investment funds rates are high, making financial arrangement inadequate. In liquidity trap buyers dodge securities and keep their assets in investment funds as a result of the primary conviction that loan costs will raise soon. Since securities have an opposite relationship to financing costs, numerous customers would prefer not to hold a benefit with a value that is relied upon to decay.