In response to the persistence of recessionary gaps,some central banks have engaged in unconventional monetary policies such as
A) increasing deposit insurance.
B) reducing the velocity of money.
C) increasing open-market operations.
D) increasing seigniorage.
E) quantitative easing.

Question

Quizplus · Accepted Answer

Quantitative easing is an unconventional monetary policy that involves purchasing government securities or other financial assets from the market in order to increase the money supply and stimulate economic growth. This is done when interest rates are already low and traditional monetary policy tools have become ineffective. Other options listed such as increasing deposit insurance, reducing velocity of money, increasing open-market operations, and increasing seigniorage are traditional monetary policy tools and may not be effective in addressing recessionary gaps.

In Response to the Persistence of Recessionary Gaps,some Central Banks