Why Didn't the Surge in the Monetary Base Between 2008-2012

question 40

Multiple Choice

Why didn't the surge in the monetary base between 2008-2012 lead to a similar surge in the money supply?

• A)The currency-deposit ratio rose significantly, resulting in a much smaller money multiplier.
• B)The excess reserve-deposit ratio rose significantly, resulting in a much smaller money multiplier.
• C)The Fed increase the required reserve ratio, resulting in a much smaller money multiplier.
• D)Nonborrowed reserves declined, offsetting the increase in the monetary base.