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Roll No. : 57 69
On : 5th September,2012
DEFLATION
Under recession and deflation for over 10 years around 1990s Aggressive fiscal policy under severe budget constraint Zero interest rate policy
QUANTITATIVE EASING
QUANTITATIVE EASING
Interest rates close to zero another way of affecting price of money Aim is to still bring down interest rates Central Bank creates new money Central Bank performs Open Market Operations Cheaper borrowing Greater spending Putting additional demand in economy Pulling out of recession
RISKS
May cause higher Inflation It can fail if banks remain reluctant to lend money Depreciate countrys exchange rates Directly harms Importers and benefits Exporters Harms Creditors and holders of that currency
QUANTITATIVE EASING - II
Popular phrase used in context of American Economy around 2010 US Federal Reserve Board Infusion of about trillion dollars Consolidate the recovery of the American Economy
QUANTITATIVE EASING - II
IMPACT ON INDIA