One argument in favor of quantitative easing is that:
A) long-term interest rates have more influence over private spending than short-term interest rates.
B) short-term interest rates have more influence over private spending than long-term rates.
C) the private sector, not the Federal Reserve, should determine interest rates.
D) it decreases the budget deficit.

Question

Quizplus · Accepted Answer

Quantitative easing is a policy tool used by central banks to stimulate the economy by increasing the money supply and lowering long-term interest rates. The argument in favor of this policy is that long-term interest rates have a greater impact on private spending, particularly for larger purchases such as homes or durable goods, than short-term rates. By lowering long-term rates, quantitative easing can encourage borrowing and spending, which can stimulate economic growth.

One Argument in Favor of Quantitative Easing Is That