Quantitative easing is a policy employed by the US in recent times. What is it and why has it
been employed by the US?
What are the advantages and disadvantages of quantititive easing?
Solution
Quantitative easing is a type of monetary policy that is being executed by central bank when
standard monetary policy has become ineffective. In such policy, central bank purchases
government securities or other securities from the market in order to lower interest rates and
increase the money supply. It increases money supply and promote lending and liquidity. It is
considered when short-term interest rates are at or approaching zero, and does not involve the
printing of new banknotes.
On November 25, 2008, the Fed announced it would purchase $800 billion in bank debt, U.S.
Treasury notes and mortgage-backed securities (MBS) from member banks. The Fed created
quantitative easing to combat the financial crisis of 2008. The crise was the worst economic
disaster since theGreat Depression of 1929. It led to great recession. Becasue of which people
were left unemployed, output was low, purchasing power was less. This influences the US
economy to implement quantitaive easing.
Advantages:
Disadvantages:.
History Class XII Ch. 3 Kinship, Caste and Class (1).pptx
Quantitative easing is a policy employed by the US in recent times. .pdf
1. Quantitative easing is a policy employed by the US in recent times. What is it and why has it
been employed by the US?
What are the advantages and disadvantages of quantititive easing?
Solution
Quantitative easing is a type of monetary policy that is being executed by central bank when
standard monetary policy has become ineffective. In such policy, central bank purchases
government securities or other securities from the market in order to lower interest rates and
increase the money supply. It increases money supply and promote lending and liquidity. It is
considered when short-term interest rates are at or approaching zero, and does not involve the
printing of new banknotes.
On November 25, 2008, the Fed announced it would purchase $800 billion in bank debt, U.S.
Treasury notes and mortgage-backed securities (MBS) from member banks. The Fed created
quantitative easing to combat the financial crisis of 2008. The crise was the worst economic
disaster since theGreat Depression of 1929. It led to great recession. Becasue of which people
were left unemployed, output was low, purchasing power was less. This influences the US
economy to implement quantitaive easing.
Advantages:
Disadvantages:
