Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate the national economy when conventional monetary policy has become ineffective. A central bank buys financial assets to inject a pre-determined quantity of money into the economy. Quantitative easing was used unsuccessfully by the Bank of Japan (BOJ) to fight domestic deflation as well as recession in the early 2000s. The BOJ accomplished this by buying more government bonds than would be required to set the interest rate to zero. It also bought asset-backed securities and equities. More recently, similar policies have been used by the United States, the United Kingdom and the Eurozone during the financial crisis of 2007-2010. Quantitative easing was used by these countries as their short-term nominal interest rates are either at, or close to, zero.

(A)What are conventional monetary policies used by central banks to stimulate the national economy?

(B)Can you find possible explanations for the fact that quantitative easing was used unsuccessfully by the Bank of Japan to fight domestic deflation as well as recession in the early 2000s?

(C)United States, the United Kingdom and the Eurozone used the quantitative easing to deal with their economic recession problems caused by the financial crisis of 2007-2010. How does the quantitative easing theoretically affect the macroeconomic performances of these economies?