What is quantitative easing?
Understand the Problem
The question is asking for an explanation of the economic concept known as quantitative easing, which involves a central bank increasing the money supply to stimulate the economy. It typically aims to lower interest rates and encourage lending and investment.
Answer
Quantitative easing is a monetary policy used by central banks to lower interest rates and increase the money supply by purchasing securities.
Quantitative easing (QE) is a monetary policy used by central banks to stimulate the economy by purchasing securities to lower interest rates and increase the money supply, encouraging more lending and spending.
Answer for screen readers
Quantitative easing (QE) is a monetary policy used by central banks to stimulate the economy by purchasing securities to lower interest rates and increase the money supply, encouraging more lending and spending.
More Information
Quantitative easing is used especially during times of very low interest rates and economic downturns to encourage spending and investment. It involves the central bank enlarging its balance sheet by purchasing assets like government bonds.
Tips
A common mistake is thinking QE involves direct lending to the public or businesses, but it primarily operates through financial markets.
Sources
- Quantitative Easing (QE): What It Is and How It Works - Investopedia - investopedia.com
- Quantitative easing | Bank of England - bankofengland.co.uk
- What Is Quantitative Easing? - Kiplinger - kiplinger.com
