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Quantitative easing

Posted on : 11 Feb 2020

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  • Japan was the first to use QE from 2001 to 2006. It restarted in 2012, with the election of Shinzo Abe as Prime Minister. He promised reforms for Japan's economy with his three-arrow program, “Abenomics.”
  • The U.S. Federal Reserve undertook the most successful QE effort. It added almost $2 trillion to the money supply. That’s the largest expansion from any economic stimulus program in history, from 2008 to 2014.
  • The European Central Bank adopted QE in January 2015, after seven years of austerity measures.
  • Following are the reasons why QE is adopted by central banks:
  • To increase employment in the economy
  • To encourage lending activities
  • To encourage borrowing
  • To increase consumption spending
  • To complement low interest rates

Article Related Questions

  1. Globally, ‘quantitative easing’ measures have been adopted by central banks to revive economic growth. Which of the following best describes ‘quantitative easing’?
    1.Quantitative easing is a monetary policy in which the economy is flooded with greater money supply, to maintain artificially low interest rates, while providing consumers with extra money to spend more freely.
    2.Quantitative easing is an expansion of the open market operations of a country's central bank, where the central banks buy mortgage-backed securities from its member banks to add liquidity in the flow of money in capital markets.
    Choose the correct answer:

  2. 1.1 only

    2.2 only

    3.Both 1 and 2

    4.Neither 1 nor 2

    Right Ans : Both 1 and 2

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