The central bank of Kilberis, a country in Western Europe, prints money and uses it to buy government bonds, corporate bonds, and equities. Consequently, the amount of money in the economy has increased. The government expects that the increased amount of money in the economy will flow to banks that will lend it to consumers and investors, increasing consumption and investment and thus economic growth. This scenario is an example of _____.

Question

Quizplus · Accepted Answer

This scenario is an example of quantitative easing, a monetary policy where a central bank buys government securities or other securities from the market to increase the money supply and encourage lending and investment.

The Central Bank of Kilberis, a Country in Western Europe