Quantitative easing refers to the process whereby the Federal Reserve
A) decreases the money supply to fight inflation.
B) raises interest rates to fight inflation.
C) buys securities to stimulate the economy.
D) sells securities to stimulate the economy.

Question

Quizplus · Accepted Answer

Quantitative easing involves the Federal Reserve buying securities, such as government bonds, from banks and other financial institutions in order to increase the supply of money in the economy and stimulate lending and spending. This is typically done when interest rates are already low, so simply lowering rates further is not an option for boosting economic activity.

Quantitative Easing Refers to the Process Whereby the Federal Reserve