Quantitative easing occurs when the central bank
A) purchases long-term assets.
B) purchases short-term assets.
C) engages in open market operations.
D) performs a helicopter drop.
E) increases its interest rate target.

Question

Quizplus · Accepted Answer

Quantitative easing involves the central bank purchasing long-term assets, such as government bonds or mortgage-backed securities, in order to inject more money into the economy and lower long-term interest rates. This is in contrast to traditional open market operations, which involve buying and selling short-term assets like Treasury bills.

Quantitative Easing Occurs When the Central Bank