In the early 1930s, the monetary base increased, yet the Federal Reserve let the money supply fall
Question:
In the early 1930s, the monetary base increased, yet the Federal Reserve let the money supply fall more than 30 percent. This decrease in the money supply was the main cause of the Great Depression. The Federal Reserve was set up to prevent bank runs. It failed to do this.
Describe how bank runs cause the money supply to fall when the Federal Reserve does not do its job.
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Falling stock prices and the decline in GDP led to rising defa...View the full answer
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