Question

QE, Quantitative Easing, is considered an unconventional form of monetary policy usually used when:

1. inflation is very high and standard expansionary monetary policy has become ineffective.
2. inflation is very low or negative, and standard expansionary monetary policy has become ineffective.
3. Economic growth is very high, and standard expansionary monetary policy has become very effective.
4. Economic growth and unemployment are not the issues, instead high inflation is the issue.

Answer 1

Quantitative easing is a type of monetary policy which is adopted by fed when inflation is low because they want to stimulate the demand Thus, increasing the money supply in the country.

It is considered unconventional when the inflation has became negative and monetary policy has become ineffective there is high economic adversity some people are expecting impending recession as it can be seen in today's scenario.

The correct option is B)inflation is very low or negative, and standard expansionary monetary policy has become ineffective.

Quantitative easing is not adopted when inflation is high so rest of this statement are false.