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:

Intelligence

The capacity for learning, understanding, problem-solving, and adapting to new situations using various cognitive processes.

Unrepresentative Sample

A sample that does not accurately reflect the characteristics of the larger population from which it is drawn, potentially leading to biased results.

Correlation Coefficient

A statistical measure that indicates the extent to which two variables fluctuate together.

Scatterplot

A graph in which the values of two variables are plotted along two axes, the pattern of the resulting points revealing any correlation present.