What is quantitative easing?
Understand the Problem
The question is asking for an explanation of the economic concept known as quantitative easing. This involves discussing its definition, purpose, and how it functions within monetary policy.
Answer
Quantitative easing (QE) is a monetary policy where central banks buy securities to lower interest rates and increase money supply.
Quantitative easing (QE) is a monetary policy strategy where central banks purchase securities to reduce interest rates, increase the money supply, and boost lending to consumers and businesses.
Answer for screen readers
Quantitative easing (QE) is a monetary policy strategy where central banks purchase securities to reduce interest rates, increase the money supply, and boost lending to consumers and businesses.
More Information
Quantitative easing is used by central banks as an unconventional monetary policy tool, especially during times when interest rates are already at or near zero. By buying assets like government bonds, central banks aim to increase the money supply and encourage lending and investment.
Tips
A common mistake is confusing QE with standard open market operations. Unlike QE, open market operations are smaller in scale and focus mainly on short-term interest rate targets.
Sources
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative Easing: Here's How It Works - Bankrate - bankrate.com
- What Is Quantitative Easing? - Kiplinger - kiplinger.com
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