What is quantitative easing?
Understand the Problem
The question is asking for an explanation of the economic concept known as quantitative easing. This involves understanding its purpose, mechanisms, and impacts on the economy.
Answer
A monetary policy where central banks purchase securities to lower interest rates and increase money supply.
Quantitative easing (QE) is a monetary policy where central banks purchase securities, like government bonds, to reduce interest rates and increase money supply, encouraging lending and spending.
Answer for screen readers
Quantitative easing (QE) is a monetary policy where central banks purchase securities, like government bonds, to reduce interest rates and increase money supply, encouraging lending and spending.
More Information
Quantitative easing is used mainly when traditional monetary policies become ineffective, especially when interest rates are already near zero. It aims to boost economic activity and avoid deflation.
Tips
A common mistake is thinking QE involves printing physical money, but it actually involves purchasing financial assets.
Sources
- Quantitative easing | Bank of England - bankofengland.co.uk
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing - Wikipedia - en.wikipedia.org
