Author Question: Explain the three channels economists have identified through which quantitative or credit easing ... (Read 52 times)

CQXA · **on:** Jun 30, 2018

Explain the three channels economists have identified through which quantitative or credit easing may affect the economy.

What will be an ideal response?

Question 2

Suppose bank A has assets of 100, liabilities of 60, and capital of 40. Its capital ratio is

A) 40.
B) 66.
C) 25.
D) 60.

sylvia · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

1 ) When arbitrage fails, credit easing can work. 2 ) Quantitative easing may affect expectations of future nominal interest rates. 3 ) Quantitative easing may affect expectations of inflation.

Answer to Question 2

A