What is quantitative easing?
Understand the Problem
The question is asking for an explanation of 'quantitative easing,' which is a monetary policy used by central banks to increase the money supply and stimulate the economy. This typically involves the purchase of government securities or other financial assets to lower interest rates and increase liquidity in the financial system.
Answer
Quantitative easing is a monetary policy where central banks buy securities to reduce interest rates and boost the economy.
Quantitative easing is a monetary policy strategy where central banks purchase securities to reduce interest rates, increase the money supply, and stimulate economic activity by encouraging lending.
Answer for screen readers
Quantitative easing is a monetary policy strategy where central banks purchase securities to reduce interest rates, increase the money supply, and stimulate economic activity by encouraging lending.
More Information
Quantitative easing is used to manage economic downturns when conventional monetary policies are ineffective, especially when interest rates are already near zero.
Tips
Common mistakes include confusing QE with printing money directly, while it actually involves asset purchases to indirectly increase the money supply.
Sources
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing | Bank of England - bankofengland.co.uk
- What Is Quantitative Easing? - Kiplinger - kiplinger.com
