In 2008, the Fed utilized expansionary monetary policy, which was made

Question

Quizplus · Accepted Answer

Expansionary monetary policy involves increasing the money supply to stimulate economic activity. One way the Fed does this is by lowering the reserve requirement, which allows banks to lend out more of their deposits. However, if banks are already holding a lot of excess reserves (reserves above the required amount), then they may not choose to lend out the additional money created by the Fed's policy. In 2008, banks were holding more excess reserves than usual due to the financial crisis, which made the Fed's expansionary policy less effective. Therefore, Choice B is the best answer.

In 2008, the Fed Utilized Expansionary Monetary Policy, Which Was