Mellssa Bragg 10, Sum18, Section 1865 ework: HW Ch. 19 of 1 pt -Chapter Exercise

Question

Mellssa Bragg 10, Sum18, Section 1865 ework: HW Ch. 19 of 1 pt -Chapter Exercise 2.7 4 of 30 (28 complete) HW Score: 89.17%, 26.75 of Question Help Features True or False? The Fed uses QE when long-term interest rates are so close to zero that they cant go any lower QE involves a money supply target rather than an interest rate target The scale of QE is much smaller in size than an ordinary expansion of the money supply. QE involves the purchase of short-term bonds as opposed to longer- term bonds The goal of quantitative easing is to drive longer -term interest rates down elect your answer(s) and then click Check Answer. showing Clear A Final Check ? ? +36 9:45

Explanation / Answer

1, False

Fed uses quantitative easing to further stimulate the economy when short-term interest rates reach or approach zero, while standard expansionary monetary policy has become ineffective.

2. True

In quantitative easing money supply is targeted by the central bank by buying or selling government bonds which in turn increases the money supply so as to promote increased lending and liquidity.

3. False

QE involves of large-scale asset purchases typically of long-maturity government debt and also of private assets including corporate debt or asset-backed securities

4. False

Quantitative easing involves buying of riskier or longer maturity assets instead of short-term government bonds.

5. True

Quantitative easing is used to reduce long-term interest rates so as to stimulate economic activity

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