Glossary
Easy Money
Easy money refers to a monetary policy environment in which central banks, such as the Federal Reserve, lower interest rates and increase money supply to stimulate economic growth. It makes borrowing cheaper and encourages spending, investing, and lending.
Why do central banks adopt easy money policies?
To stimulate economic activity during slowdowns or recessions by lowering borrowing costs and increasing access to credit.
What are the tools used to create easy money?
Central banks may cut interest rates, reduce reserve requirements, or implement quantitative easing to inject liquidity into the financial system.
What are the risks of easy money?
While it can boost growth, it may also lead to inflation, asset bubbles, and excessive risk-taking if maintained too long.
How does easy money affect consumers?
Lower interest rates make loans, mortgages, and credit cheaper, encouraging spending—but also reducing returns on savings.
What’s the opposite of easy money?
Tight money or restrictive monetary policy, which raises interest rates and reduces money supply to control inflation or cool down an overheating economy.
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