When the Fed pursues a policy of quantitative easing, it:
A) is trying to increase interest rates.
B) is trying to decrease inflation.
C) purchases short-term government securities.
D) purchases long-term debt whose interest rates are significantly above zero.

Question

Quizplus · Accepted Answer

When the Fed pursues a policy of quantitative easing, it purchases long-term debt whose interest rates are significantly above zero. This increases the money supply and lowers long-term interest rates, stimulating economic growth and increasing inflation.

When the Fed Pursues a Policy of Quantitative Easing, It