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. This involves the purchase of financial assets to lower interest rates and encourage lending and investment.
Answer
Quantitative easing is a monetary policy where central banks buy securities to lower rates and increase money supply.
Quantitative easing (QE) is a monetary policy strategy where central banks purchase securities to lower interest rates, increase the money supply, and encourage lending and investment.
Answer for screen readers
Quantitative easing (QE) is a monetary policy strategy where central banks purchase securities to lower interest rates, increase the money supply, and encourage lending and investment.
More Information
Quantitative easing is used during times of economic downturn to stimulate growth by encouraging lending and investing through lowered interest rates.
Tips
A common misunderstanding is thinking QE involves printing physical money, whereas it primarily involves electronic money transfers.
Sources
- Quantitative easing | Bank of England - bankofengland.co.uk
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing - Wikipedia - en.wikipedia.org
