The Fed's mistakes of the early 1930s were compounded by its decision to
A)raise reserve requirements in 1936-1937.
B)lower reserve requirements in 1936-1937.
C)raise the monetary base in 1936-1937.
D)lower the monetary base in 1936-1937.

Question

Quizplus · Accepted Answer

The Fed's decision to raise reserve requirements in 1936-1937 in an attempt to cool off the overheated economy and combat inflation actually had the effect of reducing the money supply and worsening the depression. This policy is widely seen as a major mistake, which prolonged and deepened the Great Depression.

The Fed's Mistakes of the Early 1930s Were Compounded by Its