Quantitative Easing refers to
A) A dramatic increase in M2 when interest rates are at or close to zero
B) Cutting interest rates to zero
C) Printing cash to finance government expenditure
D) A dramatic increase in M0 when interest rates are at or close to zero
E) Printing cash to finance tax cuts

Question

Quizplus · Accepted Answer

Quantitative Easing is a monetary policy used by central banks when interest rates are close to zero. It involves buying government bonds and other financial assets from banks, which increases the banks' reserves and the money supply. This results in a dramatic increase in M0, which is the base money supply. Therefore, choice D is the best answer.

Quantitative Easing Refers to