When the economy is in a liquidity trap, consumers and businesses aren't willing to borrow and spend even though interest rates may be zero.

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In a liquidity trap, even though interest rates may be low or zero, consumers and businesses are hesitant to spend and invest due to uncertainty about the future economy. This leads to a decrease in demand, which can further exacerbate the situation.

When the Economy Is in a Liquidity Trap, Consumers and Businesses