Definition of Quantitative Easing
It is a type of budgetary policy in which money is inoculated into the economy of the country. The central bank buys various financial assets and bonds of government to enhance the economic activities. It is also termed as QE or ‘asset purchase’ and one of the unconventional forms of fiscal policy. The need for it arises when the inflation rate is negative and other budgetary policies become ineffective.
The money that is injected in this policy is either digital like the money in bank accounts or physical like cash. According to most of the researches, such type of financial policies improves wages, helps to keep the unemployment rate low, and make the economy strong.