Quantitative easing occurs when the Fed ________.
A) buys short-term bonds
B) decreases the reserve requirement
C) buys long-term bonds
D) increases the reserve requirements

Question

Quizplus · Accepted Answer

Quantitative easing occurs when the Fed buys long-term bonds in order to increase the money supply and encourage lending and investment. This is in contrast to buying short-term bonds, which is a more traditional monetary policy tool used to influence the federal funds rate. Decreasing or increasing the reserve requirement is a separate policy tool altogether.

Quantitative Easing Occurs When the Fed ________