When reducing the overnight rate was no longer seen as an option to deal with the global recession, some central banks began

Question

Quizplus · Accepted Answer

When reducing the overnight rate was no longer effective, some central banks began implementing quantitative easing measures, which involve purchasing securities from commercial banks to increase the money supply and stimulate lending and economic activity. This is typically done by creating new money digitally rather than relying on reducing interest rates. Other options listed, such as reducing reserve ratios, reducing tax rates, selling government securities, or destroying currency, may have their own unique effects on the economy, but are not direct replacements for the overnight rate as a tool of monetary policy.

When Reducing the Overnight Rate Was No Longer Seen as an Option