Which of the following is a difference between "quantitative easing" and ordinary open-market operations?
A) There is no difference between the two policy tools.
B) Open-market operations are done to lower interest rates; quantitative easing is done to increase the quantity of bank reserves.
C) Quantitative easing is done in order to lower interest rates; open-market operations are merely intended to increase bank reserves.
D) Open-market operations involve forward commitment; quantitative easing is intentionally vague to maintain ﬂexibility.

Question

Quizplus · Accepted Answer

Open-market operations are conducted to lower interest rates by increasing or decreasing the money supply through the buying or selling of government bonds. Quantitative easing, on the other hand, is done to increase the quantity of bank reserves by purchasing various assets such as government bonds, corporate bonds, and mortgage-backed securities. Therefore, the main difference between the two policy tools is their intended purpose, with open-market operations targeting interest rates and quantitative easing targeting bank reserves.

Which of the Following Is a Difference Between "Quantitative Easing