Which of the following statements about quantitative easing (or "QE") and open-market purchase is true?
A) QE is similar to open-market purchase in that both are aimed at reducing short-term interest rates in the economy.
B) QE is different from open-market purchase in that QE involves not just T-bonds but also bonds issued by other government agencies and government-backed corporations.
C) QE is done by the U.S. Treasury, whereas open-market purchase is done by the Federal Reserve System.
D) QE has to have Congressional approval, whereas open-market purchase does not.

Question

Quizplus · Accepted Answer

QE and open-market purchase both involve buying government bonds in order to increase the money supply and reduce interest rates. However, QE differs from open-market purchase in that it involves purchasing not just Treasury bonds, but also bonds issued by other government agencies and government-backed corporations. Thus, B is the correct statement. A, C, and D are all incorrect.

Which of the Following Statements About Quantitative Easing (Or "QE")