The liquidity trap is often compared to:

Question

Quizplus · Accepted Answer

The liquidity trap is often compared to "pushing on a string" because, in such a situation, central banks cannot effectively stimulate the economy through traditional monetary policy tools like lowering interest rates. This analogy illustrates the idea that, just as pushing on a string has no effect on its direction, lowering interest rates has little to no effect on stimulating economic activity or investment when rates are already near zero.

The Liquidity Trap Is Often Compared To