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Home Dictionary Q Quantitative Easing 2 (QE2) QE2 was a quantitative easing round initiated by the Federal Reserve at the end of 2010 that increased its balance sheet by $600 billion. Quantitative easing refers to strategies that a central bank can use to increase domestic money supply through asset purchases. Central banks start quantitative easing when interest rates are at or near 0%. In September 2012, QE2 was followed by QE3. Gresham's Law
September 25, 2022 Gresham’s Law states that a legally overvalued currency will force a legally undervalued currency out of circulation. Liquidity Trap
September 25, 2022 A liquidity trap is when monetary policy becomes ineffective due to very low interest rates combined with consumers choosing to save rather than invest in higher yielding bonds or other investments. M3
September 25, 2022 M3 is the total money supply, which includes M2 money as well as large time deposits, institutional money market funds, short-term repurchase agreements and larger liquid funds. Monetarist
September 25, 2022 Monetarists are economists and politicians who adhere to the theory of monetarism. Monetary Base
September 25, 2022 Also known as M0, the monetary base of an economy includes all paper and coin money in circulation, as well as bank reserves held by the central bank. Negative Interest Rate Policy (NIRP)
September 25, 2022 A negative interest rate policy (NIRP) occurs when the central bank sets its target nominal interest rate at a level below zero percent. Optimum Currency Area (OCA) Theory
September 25, 2022 The theory of optimal currency area (OCA) states that regions that are not limited by national borders and have common features should have a common currency. Paper Money
September 25, 2022 Paper money is the official paper currency of a country, which is used for transactions related to the purchase of goods and services. Pegging
September 25, 2022 Pegging is a way to control the exchange rate of the national currency by linking it to the currency of another country. Quantity Theory of Money
September 25, 2022 The quantity theory of money is the basis for understanding price changes in relation to the money supply in the economy. Reference Rate
September 25, 2022 The phrase “reference rate” refers to the base rate against which other interest rates are pegged. Sterling Overnight Interbank Average Rate (SONIA)
September 25, 2022 The Sterling Overnight Index Average, or SONIA, is an index of very short-term unsecured loans between UK financial institutions. Tapering
September 25, 2022 Rollback is the removal of the central bank’s quantitative easing policy, which is designed to stimulate economic growth. Absolute Advantage
September 25, 2022 An absolute advantage is when a manufacturer can provide a greater quantity of a product or service for the same price or the same quantity at a lower price than its competitors. Aggregate Demand
September 25, 2022 Aggregate demand measures the total demand for all finished goods and services produced in an economy. Aggregate Supply
September 25, 2022 All goods produced at a certain price in a certain period represent the aggregate supply. Alan Greenspan
September 25, 2022 Alan Greenspan is an American economist and former chairman of the Federal Reserve. Arab League
September 25, 2022 The League of Arab States is a regional multinational organization of the Arabic-speaking countries of the African and Asian continents. Austerity
September 25, 2022 Austerity refers to a strict economic policy that the government introduces to control the growing public debt, driven by increased thrift. Autarky
September 25, 2022 Autarky refers to a state of self-sufficiency and is commonly used to describe countries or economies that seek to reduce their dependence on international trade. Balance of Payments (BOP)
September 25, 2022 The balance of payments includes both the current account and the capital account. Balance of Trade (BOT)
September 25, 2022 The balance of trade (BOT) is the difference between the value of a country’s imports and exports over a given period and is the largest component of a country’s balance of payments (BOP). Base Effect
September 25, 2022 Base effect refers to the effect that the choice of base of comparison or benchmark can have on the result of a comparison between data points. Basel I
September 25, 2022 Basel I, the first of the three Basel Accords, created a set of rules that banks must follow to mitigate risk. Ben Bernanke
September 25, 2022 Ben Bernanke - former chairman of the Federal Reserve from 2006 to 2014.