Quantitative easing is when the Fed engages in purchasing financial assets from banks and other financial institutions with newly created money, resulting in larger bank excess reserves and increased money supply and liquidity.

Question

Quizplus · Accepted Answer

Quantitative easing (QE) is a monetary policy tool used by central banks, including the Federal Reserve, to stimulate the economy by increasing the money supply and improving liquidity in the financial system. This is done by purchasing financial assets, such as government bonds or mortgage-backed securities, from banks and other financial institutions with newly created money, thereby increasing the bank excess reserves and overall money supply.

Quantitative Easing Is When the Fed Engages in Purchasing Financial