Which of the following describes the outcome of quantitative easing?

Quantitative easing is a monetary policy instrument used by central banks to stimulate the economy when traditional monetary policy becomes ineffective, particularly when interest rates are already near zero. The primary objective of quantitative easing is to lower interest rates and increase the money supply, enabling more borrowing and spending.

When a central bank implements quantitative easing, it purchases government securities and other financial assets, which injects liquidity into the banking system. This increased liquidity promotes lending by banks, leading to a reduction in interest rates. Lower interest rates make borrowing cheaper for consumers and businesses, incentivizing investments and stimulating economic growth. Therefore, identifying the outcome of quantitative easing as lower interest rates is accurate, as this reflects its intended purpose of encouraging economic activity.

The other options, such as decreased money supply, higher inflation, and increased unemployment, do not directly result from the act of quantitative easing itself. While higher inflation can occur if expansionary policies are maintained too long or if the economy becomes overheated, it is not an immediate result of quantitative easing. Similarly, increased unemployment would not typically be an expected outcome of such a stimulating policy, since the goal is to bolster the economy and create jobs.