What is quantitative easing?
Understand the Problem
The question is asking for an explanation of the economic concept of quantitative easing, which is a monetary policy used by central banks to stimulate the economy by increasing the money supply.
Answer
QE is a monetary policy where central banks buy assets to lower interest rates and increase money supply.
Quantitative easing (QE) is a monetary policy strategy where a central bank buys government bonds or other financial assets to lower interest rates, increase money supply, and stimulate the economy.
Answer for screen readers
Quantitative easing (QE) is a monetary policy strategy where a central bank buys government bonds or other financial assets to lower interest rates, increase money supply, and stimulate the economy.
More Information
Quantitative easing was first utilized during the financial crisis as a tool to address economic stagnation. By purchasing financial assets, central banks aim to increase liquidity, encourage lending, and promote investment and consumption.
Tips
A common misconception is that QE directly involves an increase in spending by the government. Instead, it creates more money for banks to lend out, impacting the economy indirectly.
Sources
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing (QE) | Definition & Facts | Britannica Money - britannica.com
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