Quantitative easing is most closely akin to:
A) discount lending.
B) open-market operations.
C) fractional-reserve banking.
D) capital requirements.

Question

Quizplus · Accepted Answer

Quantitative easing involves the central bank purchasing securities in the open market in order to increase the money supply and stimulate economic activity. This closely resembles open-market operations, where the central bank buys or sells government securities to manipulate the money supply. Discount lending is when the central bank lends money to commercial banks at a discounted rate, fractional-reserve banking is the practice of banks holding only a fraction of deposits in reserve, and capital requirements refer to regulations mandating banks hold a certain level of capital to protect against losses. These are not directly related to quantitative easing.

Quantitative Easing Is Most Closely Akin To