What is quantitative easing?
Understand the Problem
The question is asking for an explanation of quantitative easing, a monetary policy used by central banks to stimulate the economy by increasing money supply. This typically involves the purchase of government securities or other financial assets to lower interest rates and increase lending and investment.
Answer
Quantitative easing is when central banks buy assets to lower interest rates and boost the economy.
Quantitative easing (QE) is a monetary policy where central banks purchase financial assets to lower interest rates, increase money supply, and promote lending and spending in the economy. It is used to stimulate economic growth when traditional monetary policy becomes ineffective.
Answer for screen readers
Quantitative easing (QE) is a monetary policy where central banks purchase financial assets to lower interest rates, increase money supply, and promote lending and spending in the economy. It is used to stimulate economic growth when traditional monetary policy becomes ineffective.
More Information
Quantitative easing is particularly used during periods of low inflation and stagnant economic growth to encourage spending by increasing the money supply.
Tips
A common misconception is that QE directly increases consumer lending. Instead, it generally lowers long-term interest rates, encouraging borrowing.
Sources
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing - Wikipedia - en.wikipedia.org
- Quantitative Easing (QE) | Definition & Facts | Britannica Money - britannica.com
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