In central banking, what is quantitative easing (QE)?
Answer and explanation
Correct answer: A. An unconventional monetary policy where the central bank purchases government and corporate bonds to inject liquidity
- Step 1: Quantitative easing is a large-scale asset purchase program where a central bank buys sovereign and private bonds from commercial banks, expanding the monetary base and lowering long-term interest rates. Answer: An unconventional monetary policy where the central bank purchases government and corporate bonds to inject liquidity. Why not the others: QE is not an overdraft cap, not direct physical currency financing of budgets, and not an environmental bank audit.
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