Liquidity traps can happen when the economy gets stuck in a rut due to lack of spending. This can be caused by either basic economic issues or a lack of confidence in the future. A study looked at how these confidence-driven traps can lead to higher inflation and interest rates. They found that certain policies, like giving guidance on future plans or cutting taxes, can have opposite effects depending on the type of trap. By understanding these differences, policymakers can make better decisions to help the economy.