The key difference between "quantitative easing" and "credit easing" is that ________.
A)the goal of the former is to raise expected inflation
B)the latter refers to a substantial change in the composition of the central bank's balance sheet
C)the latter refers to a substantial expansion of the central bank's balance sheet
D)the former is endorsed by Federal Reserve Chairman Ben Bernanke,while the latter was devised by Japan's Prime Minister Shinzo Abe
E)none of the above

Question

Quizplus · Accepted Answer

Quantitative easing involves buying large quantities of government bonds or other assets with the aim of increasing the money supply and lowering interest rates. Credit easing, on the other hand, involves targeted purchases of specific assets, such as corporate bonds, with the aim of improving the functioning of specific markets. While both involve central bank balance sheet expansion, the key difference is in the composition of the assets purchased. Option A is incorrect because raising expected inflation is not always a goal of quantitative easing. Option C is incorrect because credit easing does not necessarily involve a "substantial" expansion of the central bank's balance sheet. Option D is incorrect because credit easing was not devised by Shinzo Abe, but rather by the Federal Reserve during the global financial crisis.

The Key Difference Between "Quantitative Easing" and "Credit Easing" Is