This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: During the Financial Crisis of 2007-2009, banks significantly increased their holdings of excess ... (Read 98 times)

jc611

  • Hero Member
  • *****
  • Posts: 552
on: Jun 30, 2018
During the Financial Crisis of 2007-2009, banks significantly increased their holdings of excess reserves. What impact did this have on the money multiplier? How would the Fed change the monetary base if it wanted to maintain a stable money supply?
 
  What will be an ideal response?

Question 2

Monetary policy credibility has the benefit of ________.
 
  A) stabilizing inflation in the short run when faced with positive demand shocks
  B) stabilizing economic activity in the short run when faced with positive demand shocks
  C) transmitting the effect of aggregate demand shocks onto short-run aggregate supply
  D) enhancing the job opportunities of Federal Reserve officials after they leave the central bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

rnehls

  • Sr. Member
  • ****
  • Posts: 313
Reply #1 on: Jun 30, 2018
Answer to Question 1

An increase in the excess-to-deposit ratio results in a lower money multiplier. Left alone, this would reduce the money supply. If the Fed want a stable money supply, it would increase the monetary base enough to offset the decline in the money multiplier.

Answer to Question 2

A


jc611

  • Member
  • Posts: 552
Reply 2 on: Jun 30, 2018
Wow, this really help

AngeliqueG

  • Member
  • Posts: 343
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

In 1844, Charles Goodyear obtained the first patent for a rubber condom.

Did you know?

When taking monoamine oxidase inhibitors, people should avoid a variety of foods, which include alcoholic beverages, bean curd, broad (fava) bean pods, cheese, fish, ginseng, protein extracts, meat, sauerkraut, shrimp paste, soups, and yeast.

Did you know?

The liver is the only organ that has the ability to regenerate itself after certain types of damage. As much as 25% of the liver can be removed, and it will still regenerate back to its original shape and size. However, the liver cannot regenerate after severe damage caused by alcohol.

Did you know?

Only 12 hours after an egg cell is fertilized by a sperm cell, the egg cell starts to divide. As it continues to divide, it moves along the fallopian tube toward the uterus at about 1 inch per day.

Did you know?

Every 10 seconds, a person in the United States goes to the emergency room complaining of head pain. About 1.2 million visits are for acute migraine attacks.

Diabetes mellitus. The metabolic disease diabetes mellitus, with symptoms of polydipsia, polyuria, a Diabetes mellitus. The metabolic disease diabetes mellitus, with symptoms of polydipsia, polyuria, a
In 2007, primatologists studying chimpanzees in Senegal reported something amazing; chimpanzees were In 2007, primatologists studying chimpanzees in Senegal reported something amazing; chimpanzees were
Two areas of reduced cortical volume and one area of increased cortical volume observed in people ... Two areas of reduced cortical volume and one area of increased cortical volume observed in people ...
Friction significantly influences airflow near Earth’s surface, but its effect is negligible at ... Friction significantly influences airflow near Earth’s surface, but its effect is negligible at ...
The oceans have absorbed 90% of excess energy The oceans have absorbed 90% of excess energy
U.S. Output and Productivity Growth, 1870–2007 U.S. Output and Productivity Growth, 1870–2007
Video: Hyperglycemia Animation

For a complete list of videos, visit our video library