/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q.25 Explain how to use quantitative ... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 15: Q.25 (page 379)

Explain how to use quantitative easing to stimulate aggregate demand.

Short Answer

Expert verified

Quantitative easing should, in theory, lower long-term interest rates while increasing aggregate demand.

Step by step solution

01

Concept of Quantitative Easing 

Quantitative easing is a type of monetary policy in which a government's central bank aims to enhance liquidity in the economy by purchasing long-term state bonds from the government's largest banks.

02

Stimulation of aggregate demand. 

Purchases of long-term bonds and mortgages of private-backed deposits were used to implement quantitative easing. These two activities had a significant impact on the situation. Purchasing long-term deposits at a lower long-term interest rate while dragging tainted investments off of hidden bodies' balance sheets provided power to personal bodies' economic conditions as well as the entire economy. It also helps to stimulate aggregate demand by lowering borrowing costs and lending fees.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

How is bank regulation linked to the conduct of

monetary policy?

How do expansionary, tight, contractionary, and loose monetary policy affect aggregate demand?

List the three traditional tools that a central bank has for controlling the money supply

In government programs of bank supervision, what is being supervised?

What is a bank run?
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.