Question: 644-Q7 In explaining why monetary policy did not pull Japan out of a recession in the early 2000s, an official at the Bank of Japan

644-Q7

In explaining why monetary policy did not pull Japan out of a recession in the early 2000s, an official at the Bank of Japan was quoted as saying that despite "major increases in the money supply" the money "stayed in banks".

  • What does the official mean by saying that the money stayed in banks.
  • Why would that be a problem?
  • Where does the money go if an expansionary monetary policy is successful?

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