A nontraditional monetary policy approach to stimulate economic activity.
A) Excess reserves
B) Quantitative reserves
C) Fractional easing
D) Quantitative easing

Question

Quizplus · Accepted Answer

Quantitative easing involves the central bank purchasing government bonds and other securities to increase the money supply and lower interest rates, stimulating economic activity. This is a nontraditional monetary policy approach that has been used by central banks around the world in response to economic downturns. Excess reserves and fractional easing are not recognized nontraditional monetary policy approaches. Quantitative reserves is not a commonly used term in monetary policy.

A Nontraditional Monetary Policy Approach to Stimulate Economic Activity