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 tool used by central banks to stimulate the economy by increasing the money supply. This typically involves the purchase of government bonds and other financial assets to lower interest rates and encourage lending and investment.
Answer
Monetary policy where central banks buy securities to lower interest rates and boost the money supply.
Quantitative easing (QE) is a monetary policy strategy where central banks purchase securities to reduce interest rates, increase the money supply, and encourage 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 encourage lending to consumers and businesses.
More Information
Quantitative easing is used to stimulate the economy during times of low inflation or recession by making borrowing cheaper and encouraging investment and consumption.
Tips
A common mistake is confusing quantitative easing with printing money; QE involves purchasing existing assets to influence interest rates and liquidity rather than directly increasing currency circulation.
Sources
- What Is Quantitative Easing? - Kiplinger - kiplinger.com
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing | Bank of England - bankofengland.co.uk
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