Attempts by a central bank to increase bank deposits without a decrease in nominal short-term interest rates are referred to as ________.

Question

Quizplus · Accepted Answer

Quantitative easing is a monetary policy tool used by central banks to increase the money supply and bank deposits in the economy without decreasing short-term interest rates. This is achieved by purchasing government bonds and other securities from banks and other financial institutions, thereby increasing their reserves and providing them with more liquidity to lend out to borrowers. This can help to stimulate economic growth and increase inflation. Credit channeling, open market operations, and liquidity provision are all related to monetary policy but do not specifically refer to the use of quantitative easing to increase bank deposits.

Attempts by a Central Bank to Increase Bank Deposits Without