QE3 Followed QE2 and Operation Twist

question 88

Multiple Choice

QE3 followed QE2 and Operation Twist.Which of the following best explains how QE3 differed from the other two in order to make it more effective?

• A) QE3 promised a much larger expansion of reserves.
• B) QE3 gave a much stronger forward commitment as to when the policy would be complete.
• C) QE3 carried much more force in getting banks to lend reserves.
• D) QE3's completion was tied to economic objectives,rather than specific dates.

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Definitions:

Economic Profits

The surplus obtained when a firm’s total revenues exceed both its explicit and implicit costs, providing a full picture of its financial health.

Short Run

A period in economics during which some factors of production are fixed, limiting the ability of a business to adjust to market changes.

Perfect Competitor

A market participant in perfect competition, characterized by a homogeneous product and no single buyer or seller having market control.

Short Run

A period during which at least one input, such as plant size or capital, is fixed and cannot be changed, affecting a firm's production capabilities.