When there is a liquidity trap, when the Fed adds bank reserves, there is a large effect on borrowing, investment and aggregate demand.

Name: When there is a liquidity trap, when the Fed adds bank reserves, there is a large effect on borrowing, investment and aggregate demand.
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In a liquidity trap, adding bank reserves does not have a significant impact on borrowing, investment, or aggregate demand as interest rates are already near zero and banks may choose to hold on to excess reserves instead.

When There Is a Liquidity Trap, When the Fed Adds