It can be argues that the policy of quantitative easing in which the Federal Res

Question

It can be argues that the policy of quantitative easing in which the Federal Reserve was engaged for almost seven years resulted in less economic growth than what was originally expected. Which of the following are the reasons behind this argument? A. The impact of quantitative easing was offset by changes in the velocity of money. B. The impact of quantitative easing was offset by expansionary government spending that accompanied the federal fiscal stimulus policies. C. Both a and b are true. D. Neither a nor b are true.

Explanation / Answer

Answer - Federal Reserve Bank started policy ''Quantitative Easing'' in November 2008. Fed is engaged for almost seven year resulted in less economic growth than what was originally expected.  The impact of quantitative easing was offset by changes in the velocity of money. There for people have consumed less as compared to increase in their income. Thus economic parameters changes by not as expected.

Option A is the correct answer.

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