What is quantitative easing?
Understand the Problem
The question is asking for an explanation of the term 'quantitative easing,' which involves monetary policy used by central banks to stimulate the economy by increasing the money supply.
Answer
Quantitative easing is a monetary policy where central banks purchase securities to lower interest rates and boost the money supply.
Quantitative easing is a monetary policy where central banks purchase securities to reduce interest rates and increase the money supply, thereby encouraging lending and investment.
Answer for screen readers
Quantitative easing is a monetary policy where central banks purchase securities to reduce interest rates and increase the money supply, thereby encouraging lending and investment.
More Information
Quantitative easing is used during periods of economic downturn to stimulate the economy and prevent deflation. However, it can lead to inflation if not carefully managed.
Tips
A common mistake is confusing QE with fiscal policy. QE is a monetary policy tool used by central banks, not government spending.
Sources
- Quantitative easing - Wikipedia - en.wikipedia.org
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative Easing: Here's How It Works - Bankrate - bankrate.com
