Which of the following statements about quantitative easing is most accurate?
A) Quantitative easing refers to the Fed's use of open-market operations to buy trillions of dollars' worth of medium- and longer-maturity ﬁnancial assets.
B) Quantitative easing has become one of the permanently recognized tools of monetary policy.
C) Quantitative easing signiﬁcantly lowered interest rates in the aftermath of the ﬁnancial crisis.
D) Quantitative easing is the new oﬃcial name for open-market operations.

Question

Quizplus · Accepted Answer

Quantitative easing refers specifically to the Fed's use of open-market operations to buy large quantities of financial assets, typically bonds, in order to increase the money supply and lower long-term interest rates. This is an expansionary monetary policy tool used by central banks to stimulate the economy during periods of low growth or deflation. Choice B is not entirely accurate, as the use of quantitative easing is typically a response to economic conditions rather than a permanent feature of monetary policy. Choice C is partially accurate, as one of the primary goals of quantitative easing is to lower interest rates, but the impact on rates is not necessarily significant or immediate. Choice D is not accurate, as open-market operations are a broader category of monetary policy tools that encompass a range of actions taken by central banks to influence the money supply and credit conditions.

Which of the Following Statements About Quantitative Easing Is Most