Quantitative easing is a central bank policy that attempts to stimulate the economy by possibly
A) selling Treasury securities.
B) making discount loans to nonfinancial corporations.
C) slowly reducing the required reserve ratio.
D) buying long-term securities.

Question

Quizplus · Accepted Answer

Quantitative easing involves a central bank buying long-term securities, such as government bonds, to increase the money supply and lower interest rates in an attempt to stimulate economic growth. This is different from selling Treasury securities (A), making discount loans to nonfinancial corporations (B), or slowly reducing the required reserve ratio (C), which are other monetary policy tools that may be used by a central bank but are not part of quantitative easing.

Quantitative Easing Is a Central Bank Policy That Attempts to Stimulate