During the Financial Crisis of 2007-2009, banks significantly increased their holdings of excess reserves. What impact did this have on the money multiplier? How would the Fed change the monetary base if it wanted to maintain a stable money supply?
What will be an ideal response?
An increase in the excess-to-deposit ratio results in a lower money multiplier. Left alone, this would reduce the money supply. If the Fed want a stable money supply, it would increase the monetary base enough to offset the decline in the money multiplier.
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What happens to the demand curve when a nonprice determinant of demand changes?
A. The demand curve shifts horizontally. B. There is a movement along the demand curve. C. The consumer moves to a different price point. D. Nothing changes with the demand curve.
Why do firms practice price discrimination?
Pollution rights may be traded if
A. polluters try to hide pollution. B. administrators are uncertain about Pigouvian taxes. C. there is no market for pollution. D. pollution is harmless.
In 1930, the U.S. government attempted to help domestic firms that were harmed by the Great Depression by
A) establishing the General Agreement on Tariffs and Trade (GATT). B) passing the Smoot-Hawley Tariff. C) establishing the World Trade Organization (WTO). D) passing the North American Free Trade Agreement (NAFTA).