Question: 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

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". Explain what the official meant 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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Understanding the Problem with Monetary Policy in Japan during the Early 2000s During the early 2000s Japan faced a prolonged period of economic stagnation and deflation The Bank of Japan attempted to ... View full answer

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