During the Great Depression, bank holdings of excess reserves increased, as did the public's holdings of currency relative to deposits. These actions decreased the money multiplier. How did the Fed respond to the resulting decrease in money supply?

Question

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The Fed raised reserve requirements during the Great Depression, which unfortunately worsened the crisis by further reducing the banks' ability to lend. This action, rather than mitigating the decrease in the money supply, exacerbated the economic downturn by tightening the money supply even more.

During the Great Depression, Bank Holdings of Excess Reserves Increased