What is quantitative easing?
Understand the Problem
The question is asking about quantitative easing, a monetary policy used by central banks to stimulate the economy by increasing the money supply. This involves the purchase of government securities and other financial assets to lower interest rates and encourage lending and investment.
Answer
Quantitative easing is a monetary policy where central banks purchase securities to reduce interest rates and increase money supply.
Quantitative easing (QE) is a monetary policy strategy used by central banks, like the Federal Reserve, where they purchase securities to reduce interest rates, increase the money supply, and stimulate lending to consumers and businesses.
Answer for screen readers
Quantitative easing (QE) is a monetary policy strategy used by central banks, like the Federal Reserve, where they purchase securities to reduce interest rates, increase the money supply, and stimulate lending to consumers and businesses.
More Information
Quantitative easing is often used during times of severe economic downturn or when traditional monetary policies are insufficient. By increasing the money supply and encouraging lending, central banks aim to boost economic activity.
Tips
A common mistake is confusing quantitative easing with other monetary policies like lowering interest rates or printing money directly. QE involves asset purchases rather than direct money creation.
Sources
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing - Wikipedia - en.wikipedia.org
- Quantitative Easing (QE) | Forbes Advisor - forbes.com
