Thursday, March 19, 2009

Quantitative Easing

Check out the interactive video explanation of "quantitative easing" here if you have heard or read the term and don't quite understand it.

After you listen to the explanation, see if you can get a perfect score on the following quiz.

1. How is "quantitative easing" different from printing new money?
2. How is "quantitative easing" different from what Zimbabwe has been doing for several years?
3. Is "quantitative easing" an increase in real income (i.e., increase in real GDP)?
4. Will "quantitative easing" help the economy return to growth?

Quiz answers: 1. It isn't; 2. It isn't; 3: It isn't; 4. It won't

How did you do?

Extra credit question: Why do you think the Fed is going to directly increase the money supply rapidly just now?

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