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Explain why QE became necessary after the Covid-19 shock QE can have two desired effects: It can lower the risk premium and it can increase
- Explain why QE became necessary after the Covid-19 shock
- QE can have two desired effects: It can lower the risk premium and it can increase inflation (because the central bank increases money supply). For each of these two, explain in words
how they may stimulate the economy. Show the effects graphically in one single IS-LM diagram. Why is it important to consider the zero lower bound?
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Economics
Authors: R. Glenn Hubbard
6th edition
978-0134797731, 134797736, 978-0134106243
