What is quantitative easing?
Understand the Problem
The question is asking for an explanation of the term 'quantitative easing.' This is a monetary policy used by central banks to stimulate the economy by increasing the money supply, primarily through the purchase of government securities or other securities from the market.
Answer
Quantitative easing involves central banks buying securities to reduce interest rates and increase money supply.
Quantitative easing (QE) is a monetary policy strategy where central banks purchase financial assets like government bonds to reduce interest rates, boost money supply, and encourage lending and investment.
Answer for screen readers
Quantitative easing (QE) is a monetary policy strategy where central banks purchase financial assets like government bonds to reduce interest rates, boost money supply, and encourage lending and investment.
More Information
Quantitative easing is typically used during periods of low inflation and economic stagnation to stimulate economic growth. It aims to lower long-term interest rates, which can increase borrowing and spending.
Tips
A common mistake is confusing QE with printing money directly. QE works through purchasing assets to inject liquidity into the financial system.
Sources
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing | Bank of England - bankofengland.co.uk
- Quantitative easing - Wikipedia - en.wikipedia.org
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