Rational inattention means people ignore less important information, focusing only on what matters most to save time, effort, and mental resources.

A liquidity trap occurs when near-zero interest rates fail to spur spending or investment, rendering monetary policy ineffective and leading to prolonged economic stagnation.

When uncertainty clouds the markets and risk begins to outweigh reward, investors instinctively pivot toward safety. Capital starts flowing away from volatile assets, seeking stability and trust—reshaping the financial landscape in moments of stress.