Why Did the Monetary Base Increase Rapidly During the Economic

question 109

Multiple Choice

Why did the monetary base increase rapidly during the economic crisis of 2008?

• A) The Fed purchased more assets and extended more loans.
• B) The Fed sold financial assets and extended fewer loans.
• C) The Fed purchased more assets, but extended fewer loans.
• D) The Fed sold financial assets, but extended more loans.

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Definitions:

Financial Statement

A written record that conveys the business activities and the financial performance of a company, usually consisting of the balance sheet, income statement, and cash flow statement.

Normal Balance

Refers to the side (debit or credit) where increases in the account are recorded, which is a fundamental aspect of double-entry bookkeeping.

Subsidiary Ledger

An accounting ledger containing detailed information for individual accounts, used to support the main ledger.