What is quantitative easing?
Understand the Problem
The question is asking for an explanation of the concept of quantitative easing, which is a monetary policy used by central banks to stimulate the economy by increasing the money supply and lowering interest rates.
Answer
Monetary policy where central banks buy securities to increase money supply and reduce interest rates.
Quantitative easing (QE) is a monetary policy strategy used by central banks, where they purchase securities to increase the money supply, reduce interest rates, and encourage lending to consumers and businesses.
Answer for screen readers
Quantitative easing (QE) is a monetary policy strategy used by central banks, where they purchase securities to increase the money supply, reduce interest rates, and encourage lending to consumers and businesses.
More Information
Quantitative easing is used to inject liquidity into the economy during periods of slow growth or recession. By buying financial assets, central banks aim to lower long-term interest rates, making borrowing cheaper for businesses and consumers.
Tips
A common mistake is confusing quantitative easing with standard interest rate adjustments, which affect short-term rates, while QE focuses on long-term rates.
Sources
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- What Is Quantitative Easing? - Kiplinger - kiplinger.com
- Quantitative easing - Wikipedia - en.wikipedia.org
AI-generated content may contain errors. Please verify critical information
