Recall the Application About the Fed Increasing Bank Reserves During

question 60

Multiple Choice

Recall the Application about the Fed increasing bank reserves during the financial crisis in 2008 to answer the following question(s) . During the height of the financial crisis in September 2008, The Fed injected large amounts of reserves into banks, and in the next month, they started paying interest to banks on these reserves. Prior to this time, banks earned no interest on either required or excess reserves.
-According to this Application, the Fed injected large amounts of reserves into banks during the 2008 financial crisis. The Fed needs to make sure that, in the long run, banks do not loan out too many of these reserves or the result will be

• A) higher inflation.
• B) higher interest rates.
• C) additional unemployment.
• D) a smaller money multiplier.

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Definitions:

Object Permanence

The understanding that objects continue to exist even when they cannot be observed (seen, heard, touched, smelled, or sensed in any way).

Deferred Imitation

The capability of reproducing a behavior observed at an earlier time, without the immediate presence of the original stimulus.

Circular Reactions

Repetitive actions or behaviors, primarily in infants, which serve to explore and learn about the environment, and are a key part of cognitive development.

Equilibration

In Piaget's theory, the cognitive process of achieving balance between one's existing mental schemas and new experiences.