One argument in favour 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

The argument in favour of quantitative easing is that by lowering long-term interest rates, it can stimulate borrowing and investment, which leads to increased private spending and economic growth. Short-term interest rates may have an impact on the economy, but they are more influenced by monetary policy actions such as adjusting the federal funds rate. Therefore, quantitative easing focuses on long-term interest rates as they have a greater impact on private spending. The other choices are not relevant to the argument for quantitative easing.

One Argument in Favour of Quantitative Easing Is That