As the Fed Increased Its Asset Holdings and the Volume

question 33

Multiple Choice

As the Fed increased its asset holdings and the volume of loans to financial institutions during the latter half of 2008,the result was

• A)a vast increase in the monetary base and in the excess reserves of the commercial banking system.
• B)a substantial increase in short term interest rates.
• C)a sharp decrease in the monetary base,as well as a depletion of the excess reserves of the commercial banking system.
• D)an increase in the volume of loans extended by commercial banks and a sharp increase in the inflation rate.

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