Why did the monetary base increase rapidly during the economic crisis of 2008?
A) The Fed sold financial assets and extended fewer loans.
B) The Fed increased both its purchase of assets and quantity of loans extended.
C) The Fed increased its purchases of assets, but offset this with an increase in the reserve requirement.
D) The Fed sold financial assets, but offset this with a reduction in the reserve requirement.

Question

Quizplus · Accepted Answer

To combat the economic crisis of 2008, the Fed implemented expansionary monetary policy, including increasing both its purchase of assets and the quantity of loans extended. This led to a rapid increase in the monetary base.

Why Did the Monetary Base Increase Rapidly During the Economic