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Describe quantitative easing

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The Bank of England has switched from interest rate cuts to "quantitative easing." This policy involves buying bonds from commercial banks in the hope that these institutions will again lend in vast quantities to businesses and individuals after sitting tight since the credit crisis erupted in 2007.

  • What terminology would most economists use to describe "quantitative easing"?
  • How is this supposed to induce banks to begin lending?
  • Why would commercial banks be sitting tight since the 2007 crisis?

Reference no: EM132051579

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