As Expansionary Monetary Policy Tools, Quantitative Easing (QE) and Traditional

question 219

Multiple Choice

As expansionary monetary policy tools, quantitative easing (QE) and traditional open-market purchase differ in terms of the following, except

• A)the intended effect on the federal funds rate.
• B)securities purchased by the Fed.
• C)the mechanics of how the Fed buys the securities.
• D)the desired goal of shifting aggregate demand.

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Definitions:

Money Supply

This refers to the total amount of monetary assets available in an economy at a specific time.

Inflation Rate

The pace at which prices for goods and services across the board escalate, resulting in the diminishing value of money.

Cyclical Unemployment

Unemployment caused by the cyclical trends in the economy, fluctuating with the ups and downs of business cycles.

Unemployment Rate

The unemployment rate is a metric that quantifies the proportion of the workforce that is without a job and is actively looking for work.