Quantitative easing (QE) is a monetary policy tool that involves:

Quantitative easing (QE) is a monetary

Multiple choice — select the best answer

ALarge-scale purchases of longer-term securities to inject liquidity when short-term rates are near zero
BRaising reserve requirements to restrict bank lending
CSelling government securities to reduce the money supply
DIncreasing the federal funds rate target

✓ Correct answer: A. Large-scale purchases of longer-term securities to inject liquidity when short-term rates are near zero QE is used when conventional monetary policy is constrained by the zero lower bound on interest rates. By buying long-term Treasuries and mortgage-backed securities, the Fed expands its balance sheet and pushes down long-term yields.

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Topic: Economic Factors

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Quantitative easing (QE) is a monetary policy tool that involves:

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