What is quantitative easing?
Understand the Problem
The question is asking for an explanation of the concept of quantitative easing, which is a monetary policy used by central banks to stimulate the economy by increasing the money supply and lowering interest rates. This involves the central bank purchasing government securities or other financial assets to inject liquidity into the economy.
Answer
Quantitative easing is a monetary policy where central banks purchase securities to reduce interest rates and increase money supply, encouraging lending.
Quantitative easing is a monetary policy where central banks purchase securities to reduce interest rates and increase money supply, encouraging lending.
Answer for screen readers
Quantitative easing is a monetary policy where central banks purchase securities to reduce interest rates and increase money supply, encouraging lending.
More Information
Quantitative easing is typically used when traditional monetary policy tools, like lowering interest rates, become ineffective. It can help to stimulate economic activity during downturns.
Tips
A common mistake is thinking QE involves printing money directly for public use, while it actually involves purchasing securities from the open market.
Sources
- Quantitative Easing: What It Is and How It Works - Investopedia - investopedia.com
- What Is Quantitative Easing? - Kiplinger - kiplinger.com
- Quantitative easing | Bank of England - bankofengland.co.uk
