During the fourth quarter of 2008, the Fed doubled the monetary base but the quantity of money
Question:
During the fourth quarter of 2008, the Fed doubled the monetary base but the quantity of money (M2) increased by only 5 percent.
Why did M2 not increase by much more than 5 percent? What would have happened to the quantity of M2 if the Fed had kept the monetary base constant?
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When the Fed increases the monetary base M2 increases and the increase is determined by ...View the full answer
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