This book addresses the current issue of low interest rates worldwide and translates the concept of the liquidity trap, originating from John M. Keynes, into modern macroeconomics. Three simple dynamic models are used to investigate whether the liquidity trap is a permanent or temporary phenomenon, whether this phenomenon is stable or unstable, and which assumptions and parameters influence the answers to the first two questions. A critical examination of the prevailing views on the liquidity trap in monetary theory and policy is particularly emphasized. The key findings of the predominantly algebraic analysis are illustrated through various graphical tools.