Subjects
Maths
Chemistry
Biology
English Language
History
Responding to change (a2 only)
Infection and response
Homeostasis and response
Energy transfers (a2 only)
Cell biology
Organisms respond to changes in their internal and external environments (a-level only)
Biological molecules
Organisation
Substance exchange
Bioenergetics
Genetic information & variation
Inheritance, variation and evolution
Genetics & ecosystems (a2 only)
Ecology
Cells
Show all topics
Britain & the wider world: 1745 -1901
1l the quest for political stability: germany, 1871-1991
The cold war
Inter-war germany
Medieval period: 1066 -1509
2d religious conflict and the church in england, c1529-c1570
2o democracy and nazism: germany, 1918-1945
1f industrialisation and the people: britain, c1783-1885
1c the tudors: england, 1485-1603
2m wars and welfare: britain in transition, 1906-1957
World war two & the holocaust
2n revolution and dictatorship: russia, 1917-1953
2s the making of modern britain, 1951-2007
World war one
Britain: 1509 -1745
Show all topics
Economics
2 Dec 2025
125
3 pages
Tanvir Ahmed @txnvir_ahmed
When traditional monetary policy hits its limits, central banks turn to quantitative easing(QE) - essentially creating money... Show more
Quantitative easing kicks in when conventional monetary policy runs out of steam - specifically when interest rates are already at or near 0%. You can't cut rates below zero (well, not easily), so central banks need a different toolkit to stimulate economic growth.
The Bank of England first introduced QE to the UK in March 2009 during the financial crisis. Think of it as Plan B for monetary policy - when the usual interest rate adjustments won't work anymore.
Key Point QE targets the base money supply to boost aggregate demand and prevent recessions from turning into dangerous deflationary spirals where prices keep falling.
The goal is brilliant in its simplicity flood the banking system with more money so banks feel confident lending to businesses and consumers at cheaper rates. More lending means more spending, which gets the economy moving again.
Here's where it gets interesting - the central bank doesn't literally print new banknotes. Instead, it creates money electronically (basically adding zeros to a computer account) and uses this digital cash to buy government bonds from banks and financial institutions.
When the central bank starts hoovering up government bonds, basic supply and demand kicks in. More buyers chasing the same bonds pushes bond prices higher. Here's the clever bit when bond prices rise, their yield (the return investors get) automatically falls.
This creates a domino effect throughout the financial system. Banks suddenly have loads more cash on their balance sheets from selling those bonds, and they need to do something profitable with it.
Remember Bond prices and yields move in opposite directions - when one goes up, the other comes down. This relationship is crucial for understanding how QE works.
The asset purchase scheme essentially forces money into the banking system, making it cheaper and easier for banks to lend to businesses and households.
The magic happens when lower government bond yields start affecting other interest rates across the economy. Mortgage rates and corporate bond rates typically follow government bond yields downward, making borrowing cheaper for everyone.
With more cash sloshing around the banking system and lower interest rates everywhere, banks become more willing to lend. Businesses find it easier to get loans for expansion, and consumers can access cheaper mortgages and personal loans.
This feeds directly into aggregate demand through two main channels increased consumption (people spend more when borrowing is cheap) and higher investment (businesses expand when financing costs fall). The result? Economic growth gets back on track.
Real Impact QE doesn't just change numbers on bank balance sheets - it's designed to translate into real-world spending that creates jobs and economic growth.
The beauty of QE lies in how it works around the zero interest rate problem, giving central banks a powerful tool even when conventional monetary policy is maxed out.
Our AI Companion is a student-focused AI tool that offers more than just answers. Built on millions of Knowunity resources, it provides relevant information, personalised study plans, quizzes, and content directly in the chat, adapting to your individual learning journey.
You can download the app from Google Play Store and Apple App Store.
That's right! Enjoy free access to study content, connect with fellow students, and get instant help – all at your fingertips.
2
Smart Tools NEW
Transform this note into: ✓ 50+ Practice Questions ✓ Interactive Flashcards ✓ Full Mock Exam ✓ Essay Outlines
Explore the key concepts of monetary policy, including interest rates, the role of the Monetary Policy Committee (MPC), and the impact of policy changes on the economy. This summary covers objectives like controlling inflation, supporting economic recovery, and ensuring financial stability, making it essential for AS/A-Level Economics students.
EconomicsExplore the various communication channels and methods in business, including verbal, non-verbal, and technological communication. This summary covers the benefits and drawbacks of formal and informal communication, barriers to effective communication, and factors influencing the choice of communication channels. Ideal for CCEA GCE A2 Business Studies students seeking to enhance their understanding of communication theory and practice.
EconomicsExplore the key components of financial markets, including money markets, capital markets, and foreign exchange markets. This summary covers essential concepts such as bonds, loans, and market types, providing insights into how financial institutions operate and their role in economic growth. Ideal for AQA Economics A-level students.
EconomicsQuotes from every main character
English LiteratureApp Store
Google Play
The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.
Stefan S
iOS user
This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.
Samantha Klich
Android user
Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.
Anna
iOS user
Best app on earth! no words because it’s too good
Thomas R
iOS user
Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.
Basil
Android user
This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.
David K
iOS user
The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!
Sudenaz Ocak
Android user
In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.
Greenlight Bonnie
Android user
very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.
Rohan U
Android user
I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.
Xander S
iOS user
THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮
Elisha
iOS user
This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now
Paul T
iOS user
The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.
Stefan S
iOS user
This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.
Samantha Klich
Android user
Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.
Anna
iOS user
Best app on earth! no words because it’s too good
Thomas R
iOS user
Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.
Basil
Android user
This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.
David K
iOS user
The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!
Sudenaz Ocak
Android user
In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.
Greenlight Bonnie
Android user
very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.
Rohan U
Android user
I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.
Xander S
iOS user
THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮
Elisha
iOS user
This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now
Paul T
iOS user
Tanvir Ahmed
@txnvir_ahmed
When traditional monetary policy hits its limits, central banks turn to quantitative easing (QE) - essentially creating money electronically to buy government bonds. This unconventional approach became crucial during economic crises when interest rates couldn't be cut any further.
Access to all documents
Improve your grades
Join milions of students
By signing up you accept Terms of Service and Privacy Policy
Quantitative easing kicks in when conventional monetary policy runs out of steam - specifically when interest rates are already at or near 0%. You can't cut rates below zero (well, not easily), so central banks need a different toolkit to stimulate economic growth.
The Bank of England first introduced QE to the UK in March 2009 during the financial crisis. Think of it as Plan B for monetary policy - when the usual interest rate adjustments won't work anymore.
Key Point: QE targets the base money supply to boost aggregate demand and prevent recessions from turning into dangerous deflationary spirals where prices keep falling.
The goal is brilliant in its simplicity: flood the banking system with more money so banks feel confident lending to businesses and consumers at cheaper rates. More lending means more spending, which gets the economy moving again.
Access to all documents
Improve your grades
Join milions of students
By signing up you accept Terms of Service and Privacy Policy
Here's where it gets interesting - the central bank doesn't literally print new banknotes. Instead, it creates money electronically (basically adding zeros to a computer account) and uses this digital cash to buy government bonds from banks and financial institutions.
When the central bank starts hoovering up government bonds, basic supply and demand kicks in. More buyers chasing the same bonds pushes bond prices higher. Here's the clever bit: when bond prices rise, their yield (the return investors get) automatically falls.
This creates a domino effect throughout the financial system. Banks suddenly have loads more cash on their balance sheets from selling those bonds, and they need to do something profitable with it.
Remember: Bond prices and yields move in opposite directions - when one goes up, the other comes down. This relationship is crucial for understanding how QE works.
The asset purchase scheme essentially forces money into the banking system, making it cheaper and easier for banks to lend to businesses and households.
Access to all documents
Improve your grades
Join milions of students
By signing up you accept Terms of Service and Privacy Policy
The magic happens when lower government bond yields start affecting other interest rates across the economy. Mortgage rates and corporate bond rates typically follow government bond yields downward, making borrowing cheaper for everyone.
With more cash sloshing around the banking system and lower interest rates everywhere, banks become more willing to lend. Businesses find it easier to get loans for expansion, and consumers can access cheaper mortgages and personal loans.
This feeds directly into aggregate demand through two main channels: increased consumption (people spend more when borrowing is cheap) and higher investment (businesses expand when financing costs fall). The result? Economic growth gets back on track.
Real Impact: QE doesn't just change numbers on bank balance sheets - it's designed to translate into real-world spending that creates jobs and economic growth.
The beauty of QE lies in how it works around the zero interest rate problem, giving central banks a powerful tool even when conventional monetary policy is maxed out.
Our AI Companion is a student-focused AI tool that offers more than just answers. Built on millions of Knowunity resources, it provides relevant information, personalised study plans, quizzes, and content directly in the chat, adapting to your individual learning journey.
You can download the app from Google Play Store and Apple App Store.
That's right! Enjoy free access to study content, connect with fellow students, and get instant help – all at your fingertips.
2
Smart Tools NEW
Transform this note into: ✓ 50+ Practice Questions ✓ Interactive Flashcards ✓ Full Mock Exam ✓ Essay Outlines
Explore the key concepts of monetary policy, including interest rates, the role of the Monetary Policy Committee (MPC), and the impact of policy changes on the economy. This summary covers objectives like controlling inflation, supporting economic recovery, and ensuring financial stability, making it essential for AS/A-Level Economics students.
EconomicsExplore the various communication channels and methods in business, including verbal, non-verbal, and technological communication. This summary covers the benefits and drawbacks of formal and informal communication, barriers to effective communication, and factors influencing the choice of communication channels. Ideal for CCEA GCE A2 Business Studies students seeking to enhance their understanding of communication theory and practice.
EconomicsExplore the key components of financial markets, including money markets, capital markets, and foreign exchange markets. This summary covers essential concepts such as bonds, loans, and market types, providing insights into how financial institutions operate and their role in economic growth. Ideal for AQA Economics A-level students.
EconomicsQuotes from every main character
English LiteratureApp Store
Google Play
The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.
Stefan S
iOS user
This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.
Samantha Klich
Android user
Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.
Anna
iOS user
Best app on earth! no words because it’s too good
Thomas R
iOS user
Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.
Basil
Android user
This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.
David K
iOS user
The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!
Sudenaz Ocak
Android user
In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.
Greenlight Bonnie
Android user
very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.
Rohan U
Android user
I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.
Xander S
iOS user
THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮
Elisha
iOS user
This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now
Paul T
iOS user
The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.
Stefan S
iOS user
This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.
Samantha Klich
Android user
Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.
Anna
iOS user
Best app on earth! no words because it’s too good
Thomas R
iOS user
Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.
Basil
Android user
This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.
David K
iOS user
The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!
Sudenaz Ocak
Android user
In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.
Greenlight Bonnie
Android user
very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.
Rohan U
Android user
I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.
Xander S
iOS user
THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮
Elisha
iOS user
This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now
Paul T
iOS user
Sociology