Question

Which of the following corresponds to quantitative easing?

• A. The Central Bank buys bonds and other government securities from commercial banks
• B. The Central Bank sells bonds and other government securities to commercial banks
• C. The Central Banks increases the repo rate
• D. None of the above

Answer 1

The correct option is A

The Central Bank buys bonds and other government securities from commercial banks

Quantitative easing is an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply.