Question

13. Quantitative Easing refers to untraditional monetary policy in response to the housing crisis. Which of the following statements about QE is (are) FALSE: I. 11, II The US FED was the only monetary system to use QE as a method to stabilize the financial markets US Debt as a percentage of US GDP has increased dramatically because of QE The US FED sold government bonds to increase the money supply a. C. 14. What type of entity is most likely to offer a DRIP: a. The US government b. A Silicon Valley start-up with a big idea c. An oil exploration and production company d. A mature company that sells toilet paper e. A mature company that sells construction equipment 15.This question technically relates to Chapter 14, but we also discussed this in lecture. Which of thoe following statements about dividend policy is (are) most likely TRUE: L. Tax rates are the primary determinate of dividend policy Increases in dividends tend to lag increases in earnings per share Management is usually reluctant to decrease dividend payments unless absolutely necessary a. C.

Answer 1

In quantitative easing, Fed buys government bonds to increase the cash in the economy. Thus due to the QE amount of debt in the economy increases as a % of GDP.

Thus in QE, Fed buys government bonds to increase the money supply in the system.

Also, QE has been used by many other central banks of different countries.

Thus the statement (II) and (III) are FALSE.

Hence the option (e) is correct.