In response to already low interest rates doing little to stimulate the economy,the Fed announced a new program in September 2011 under which it would purchase long-term Treasury securities while selling an equal amount of shorter-term Treasury securities.This policy was known as
A)inflation targeting.
B)Operation Twist.
C)securities-bubble deflating.
D)quantitative easing.

Question

Quizplus · Accepted Answer

The policy described in the question is known as Operation Twist, which was implemented by the Federal Reserve in September 2011. This policy involved purchasing long-term Treasury securities and selling an equal amount of shorter-term Treasury securities. The goal of this policy was to lower long-term interest rates to stimulate borrowing and investment, while also keeping short-term rates low to encourage borrowing for consumption. This policy was named Operation Twist because it was intended to "twist" the shape of the yield curve, which shows the relationship between interest rates and the maturities of different bonds.

In Response to Already Low Interest Rates Doing Little to Stimulate