What is quantitative easing?
A) The central bank decreasing money supply when interest rates are negative.
B) The central bank decreasing money supply at the zero interest rate bound.
C) The central bank increasing money supply at the zero interest rate bound.
D) The central bank increasing money supply when interest rates are negative.
E) The central bank increasing interest rates at the zero money supply bound.

Question

Quizplus · Accepted Answer

Quantitative easing is a monetary policy tool used by central banks to increase money supply and boost economic activity. This involves purchasing government bonds or other securities from banks and other financial institutions, which increases the amount of money available for lending and borrowing. This is typically done when interest rates are already low (at or close to the zero-bound) and traditional monetary policy measures have been exhausted. So, the correct answer is C - the central bank increasing money supply at the zero interest rate bound.

What Is Quantitative Easing