From before the financial crisis began in September of 2007 to when the crisis was over at the end of 2009,amount of Federal Reserve assets rose,leading to
A)a huge increase in the monetary base.
B)a huge expansion of the money supply.
C)an economic expansion.
D)a high inflation.

Question

Quizplus · Accepted Answer

The increase in Federal Reserve assets led to a huge increase in the monetary base, which is the sum of physical currency and reserve balances held by banks. This expansion of the monetary base did not necessarily lead to an expansion of the broader money supply, as banks may not have lent out all of their additional reserves. An economic expansion and high inflation did not necessarily result from this increase in Federal Reserve assets.

From Before the Financial Crisis Began in September of 2007