Why Did the Monetary Base Increase Rapidly During the Economic

question 58

Multiple Choice

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

• A) The Fed sold financial assets and extended fewer loans.
• B) The Fed increased both its purchase of assets and quantity of loans extended.
• C) The Fed increased its purchases of assets, but offset this with an increase in the reserve requirement.
• D) The Fed sold financial assets, but offset this with a reduction in the reserve requirement.

---

Definitions:

Stimulus Discrimination

Stimulus discrimination is the ability to differentiate between distinct but similar stimuli, responding only to the one associated with a reinforcement.

Traffic Light

A signaling device positioned at road intersections, pedestrian crossings, and other locations to control the flow of traffic.

Green Light

A signal to proceed or an indication that a proposed action is acceptable or safe.

Fixed-interval Schedule

A schedule of reinforcement where the first response is rewarded only after a specified amount of time has elapsed.