What is quantitative easing?
Understand the Problem
The question is asking for an explanation of the concept of quantitative easing, 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 monetary policy where central banks buy securities to influence the economy.
Quantitative easing (QE) is a monetary policy where central banks buy securities to reduce interest rates, raise the money supply, and promote lending and spending in the economy.
Answer for screen readers
Quantitative easing (QE) is a monetary policy where central banks buy securities to reduce interest rates, raise the money supply, and promote lending and spending in the economy.
More Information
Quantitative easing is often used during periods of low inflation and recession as a way to stimulate economic activity. By purchasing financial assets, central banks aim to lower long-term interest rates, encourage borrowing, and increase spending.
Tips
A common mistake is believing QE directly injects money into the economy, but it primarily operates by changing interest rates and encouraging lending.
Sources
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing - Wikipedia - en.wikipedia.org
- Quantitative easing | Bank of England - bankofengland.co.uk
