Nonconventional monetary policy attempts to reduce financial frictions by ________.
A)reversing the expansion of the central bank's balance sheet that has made it costly for businesses to invest
B)purchasing short-term assets,which raises their price and reduces the credit spread
C)increasing the expected future short-term interest rate
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

Nonconventional monetary policy includes measures such as quantitative easing, forward guidance, and negative interest rates, aimed at addressing financial frictions not directly targeted by the options provided. These policies often involve purchasing long-term assets to lower long-term interest rates and providing guidance on future monetary policy rather than the actions described in the options.

Nonconventional Monetary Policy Attempts to Reduce Financial Frictions by ________