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 stimulate the economy when standard monetary policy becomes ineffective. The main idea is that the central bank increases the money supply to encourage lending and investment.
Answer
Quantitative easing (QE) is when central banks buy securities to lower interest rates and boost the economy.
Quantitative easing (QE) is a monetary policy strategy where central banks purchase financial assets like government bonds to lower interest rates, increase money supply, and boost lending and spending in the economy.
Answer for screen readers
Quantitative easing (QE) is a monetary policy strategy where central banks purchase financial assets like government bonds to lower interest rates, increase money supply, and boost lending and spending in the economy.
More Information
Quantitative easing is typically used during times of economic downturn or when traditional monetary policies (like cutting interest rates) are no longer effective in stimulating growth.
Tips
A common mistake is confusing QE with printing money directly, whereas QE involves purchasing securities to inject liquidity indirectly.
Sources
- What Is Quantitative Easing? - Forbes - forbes.com
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing - Wikipedia - en.wikipedia.org
