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 increase the money supply and encourage lending and investment. It typically involves the central bank purchasing government securities or other financial assets to inject liquidity into the economy.
Answer
Monetary policy where central banks buy securities to lower interest rates and increase money supply.
Quantitative easing (QE) is a monetary policy where central banks purchase securities to reduce interest rates and increase the money supply, encouraging lending and spending.
Answer for screen readers
Quantitative easing (QE) is a monetary policy where central banks purchase securities to reduce interest rates and increase the money supply, encouraging lending and spending.
More Information
Quantitative easing aims to stimulate economic activity by making borrowing cheaper through reduced interest rates. It is often used during periods of economic downturn or recession.
Tips
A common mistake is confusing QE with lowering interest rates, which is a separate tool. QE focuses on increasing the money supply beyond adjusting rates.
