Liquidity constraint
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Liquidity constraint is a restriction on the amount a person can borrow from a financial institution, which limits the person's ability to spend his future income today; also called a borrowing constraint.
Definition
According to Macroeconomics by Mankiw (7th edition),
- Liquidity constraint. A restriction on the amount a person can borrow from a financial institution, which limits the person's ability to spend his future income today; also called a borrowing constraint.
