Question

In case of liquidity trap, the demand for
money is​

Answer 1

Answer:

A feature of a liquidity trap is that increasing the money supply has little effect on boosting demand. ... When interest rates are 0.5% and there is a further increase in the money supply, the demand for holding money in cash rather than investing in bonds is perfectly elastic.

Answer 2

Keynes's formulation of a liquidity trap refers to the existence of a horizontal demand-curve for money at some positive level of interest rates; yet, the liquidity trap invoked in the 1990s referred merely to the presence of zero or near-zero interest-rates policies (ZIRP), the assertion being that interest rates !