During the Second Half of 2008, the Fed Approximately Doubled

question 32

Multiple Choice

During the second half of 2008, the Fed approximately doubled the reserves of the commercial banking system.  As a result, the M1 money supply

• A) fell sharply, because the banks used the excess reserves to extend additional loans.
• B) also approximately doubled.
• C) was unchanged, because bank reserves will not affect the M1 money supply.
• D) increased, but by a much smaller amount, because the banks used only a small portion of their excess reserves to extend additional loans.

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Definitions:

Uncut Forest

An area of forest that has not been subjected to logging, retaining its natural characteristics and biodiversity.

Regenerated Forest

Forests that have re-grown after a major disturbance, such as logging, fires, or clear-cutting, often with the intervention of human or natural processes.

Wilderness

A natural environment on Earth that has not been significantly modified by human activity, offering critical habitat for wildlife and opportunities for human recreation.

Clear-cutting Methods

Forestry practices involving the complete removal of all trees from a particular area, often used for timber extraction.