When the Fed alters the types of assets it owns,it is engaging in
A)international balance management.
B)forward guidance.
C)quantitative easing.
D)changing the discount rate.

Question

Quizplus · Accepted Answer

Quantitative easing is a process where a central bank, such as the Federal Reserve, buys large amounts of securities or other assets from banks, which increases the bank's reserves, and thereby the supply of money in the economy. This process is used to stimulate economic growth and increase inflation.

The other choices do not accurately describe the action of the Fed altering the types of assets it owns. International balance management involves the management of trade deficits, foreign exchange rates, and capital flows. Forward guidance refers to communication from central banks about future monetary policy decisions. Changing the discount rate is a tool used by the Fed to influence the cost of borrowing and lending between banks.

When the Fed Alters the Types of Assets It Owns,it