What is quantitative easing?
Understand the Problem
The question is asking about the economic concept of quantitative easing, which refers to a monetary policy used by central banks to stimulate the economy by increasing the money supply and lowering interest rates. This often involves the purchase of government bonds or other securities to encourage lending and investment.
Answer
Quantitative easing is a central bank's policy to boost the economy by buying securities to lower interest rates and increase money supply.
Quantitative easing (QE) is a monetary policy used by central banks to stimulate the economy by purchasing securities, which reduces interest rates, increases the money supply, and encourages lending and spending.
Answer for screen readers
Quantitative easing (QE) is a monetary policy used by central banks to stimulate the economy by purchasing securities, which reduces interest rates, increases the money supply, and encourages lending and spending.
More Information
QE was first used by Japan in the early 2000s and became more widely adopted following the 2008 financial crisis. It's a nontraditional tool normally used when standard monetary policy becomes ineffective.
Tips
A common mistake is thinking QE directly involves printing money, but it typically involves digital transactions rather than physical currency production.
Sources
- What Is Quantitative Easing? - Kiplinger - kiplinger.com
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing | Bank of England - bankofengland.co.uk
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