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 the money supply. This involves the central bank purchasing financial assets to lower interest rates and encourage lending and investment.
Answer
Quantitative easing is a monetary policy where central banks buy securities to lower interest rates and boost the economy.
Quantitative easing is a monetary policy used by central banks where they purchase securities to lower interest rates, increase the money supply, and promote lending and spending in the economy.
Answer for screen readers
Quantitative easing is a monetary policy used by central banks where they purchase securities to lower interest rates, increase the money supply, and promote lending and spending in the economy.
More Information
Quantitative easing is often used during economic downturns to inject liquidity into the financial system. It is considered a nontraditional monetary policy tool.
Tips
A common mistake is confusing quantitative easing with interest rate cuts. QE directly increases money supply by buying assets, while interest rate cuts adjust the cost of borrowing.
Sources
- Quantitative easing | Bank of England - bankofengland.co.uk
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing - Wikipedia - en.wikipedia.org
