When the United States engaged in quantitative easing from 2008 to 2014,why didn't the money supply rise sharply?
A)Foreigners wanted all the new dollars created by the Federal Reserve.
B)Banks held the increased monetary base as excess reserves.
C)The Fed offset the increased monetary base by raising reserve requirements.
D)The Fed offset the increased monetary base by buying foreign currency.

Question

Quizplus · Accepted Answer

Banks held the increased monetary base as excess reserves, which meant they did not lend out the money, and thus the money supply did not rise sharply.

When the United States Engaged in Quantitative Easing from 2008