C. Large-scale purchase of assets by the central bank to inject liquidity
D. Increase in policy interest rates
Answer: Option C
Solution (By JKSSB Mock Tests)
Quantitative easing is an unconventional monetary policy tool whereby a central bank purchases large quantities of financial assets to inject liquidity into the economy when interest rates are already near zero.
Explanation:
Increase in cost of production causes cost-push inflation. Demand-pull inflation arises from excess aggregate demand due to increased money supply, government spending or consumer spending.
No comments yet. Be the first to start the discussion!