Quantitative easing is one way to stimulate the economy when the interest rate hits zero.

Question

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When a country's interest rate hits zero, it becomes difficult for conventional monetary policy tools to stimulate the economy. One alternative tool is quantitative easing, which involves a central bank buying financial securities in the open market in order to increase the money supply and lower long-term interest rates. This can stimulate borrowing and investment, thereby boosting economic activity.

Quantitative Easing Is One Way to Stimulate the Economy When