What is quantitative easing?
Understand the Problem
The question is asking for an explanation of 'quantitative easing', which is a monetary policy used by central banks to stimulate the economy by increasing the money supply. The answer will cover its definition, purpose, and effects on the economy.
Answer
Quantitative easing is a monetary policy where central banks buy securities to reduce interest rates and increase the money supply.
Quantitative easing (QE) is a monetary policy used by central banks where they purchase securities to lower interest rates and increase the money supply, aiming to boost lending and spending in the economy.
Answer for screen readers
Quantitative easing (QE) is a monetary policy used by central banks where they purchase securities to lower interest rates and increase the money supply, aiming to boost lending and spending in the economy.
More Information
Quantitative easing was first used on a large scale by the Bank of Japan in the early 2000s, though it gained global prominence during the 2008 financial crisis when central banks like the Federal Reserve and the European Central Bank adopted it.
Tips
A common mistake is confusing quantitative easing with merely lowering interest rates. QE involves the actual purchase of securities to infuse money into the economy.
Sources
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing - Wikipedia - wikipedia.org
- What Is Quantitative Easing? - Kiplinger - kiplinger.com
