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:

Siblings

Brothers or sisters who share one or both parents in common.

Primary Caregiver

An individual, often a parent or family member, who takes the main responsibility for providing care and meeting the daily needs of a child or dependent adult.

Adult Siblings

Brothers and sisters who have reached adulthood, maintaining familial relationships beyond childhood.

Adult Children

Individuals who are legally adults but are considered children in relation to their parents or guardians.