liquidity crisis

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Definition:

Liquidity Crisis (noun)
A liquidity crisis is a situation where there is not enough cash available in the market for businesses and consumers. This often happens when banks and financial institutions cannot lend money easily, and as a result, interest rates become very high.

Usage Instructions:

• You can use "liquidity crisis" when talking about financial problems in an economy or a specific business situation.
• It is often used in news articles, economic discussions, or in conversations about banking and finance.

Example:

• "During the liquidity crisis, many small businesses struggled to get loans because banks were afraid to lend money."

Advanced Usage:

In more advanced discussions, you might say: - "The liquidity crisis led to a tightening of credit, which affected consumer spending and economic growth."

Word Variants:

• Liquid (adjective): Refers to something that can easily be converted to cash, like liquid assets.
• Liquidity (noun): The availability of liquid assets in the market.
• Crisis (noun): A time of intense difficulty or danger.

Different Meanings:

• Liquidity in finance generally refers to how easily assets can be converted to cash, not just in a crisis situation.
• Crisis can refer to any critical point in time, not limited to financial contexts.

Synonyms:

• Financial crisis
• Cash crunch
• Credit squeeze

Idioms and Phrasal Verbs:

While there are no direct idioms or phrasal verbs specifically for "liquidity crisis," you can use some related phrases: - "In the red": This means being in debt or losing money, which can relate to a liquidity crisis. - "Tighten one's belt": To spend less money, which people might have to do during a liquidity crisis.

Summary:

In a liquidity crisis, the lack of available cash makes it hard for businesses and consumers to borrow money, leading to high interest rates and economic challenges.

Academic

Noun

1. a state in which there is a short supply of cash to lend to businesses and consumers and interest rates are high

Synonyms

• credit crunch
• squeeze