What Is Meant by the Term "Credit Easing

question 87

Multiple Choice

What is meant by the term "credit easing"?

• A) It is a strategy which involves the extension of central bank lending to influence more broadly the proper functioning of credit markets and to improve liquidity.
• B) It is a strategy which involves keeping interest rates very low by providing substantial reserves for as long as is necessary to avoid deflation and encourage spending.
• C) It is a strategy which involves lowering the required reserve ratio and lowering the federal funds rate to encourage banks to increase loan creation.
• D) It is a strategy which involves allowing interest rates to rise slowly by providing substantial reserves for as long as is necessary to avoid inflation.

---

Definitions:

Bonds

Bonds are fixed-income securities that represent loans made by an investor to a borrower, typically corporate or governmental, which must be repaid with interest.

Stocks

Financial instruments that signify ownership in a company and represent a claim on part of the company's assets and earnings.

Government Borrowing

The process by which governments finance their expenditure by accruing debt through issuing securities like government bonds and bills.

Budget Balance

The financial position where total revenues are equal to total expenditures within a given period, resulting in neither a surplus nor a deficit.