What is quantitative easing?
Understand the Problem
The question is asking for an explanation of the term '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
Quantitative easing is a central bank policy of buying assets to increase money supply and lower interest rates.
Quantitative easing (QE) is a monetary policy strategy used by central banks involving the purchase of financial assets, like government bonds, to lower interest rates and increase the monetary supply, encouraging more lending and spending.
Answer for screen readers
Quantitative easing (QE) is a monetary policy strategy used by central banks involving the purchase of financial assets, like government bonds, to lower interest rates and increase the monetary supply, encouraging more lending and spending.
More Information
Quantitative easing is often used by central banks during periods of low inflation or recession as a way to inject liquidity into the economy and stimulate economic activity.
Tips
A common mistake is confusing QE with simply lowering interest rates themselves. QE specifically involves asset purchases to influence the broader economic environment.
Sources
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing (QE) | Definition & Facts | Britannica Money - britannica.com
- Quantitative easing | Bank of England - bankofengland.co.uk
