Question

When the Federal Reserve began its policy of quantitative easing in November 2008, there was __________ in the monetary base.

1) no change
2) a dramatic increase
3) a slight increase
4) a decline

Answer 1

In November 2008, the Federal Reserve's initiation of quantitative easing resulted in a dramatic increase in the monetary base.

Step-by-step explanation:

When the Federal Reserve began its policy of quantitative easing (QE) in November 2008, there was a dramatic increase in the monetary base. QE was an unconventional monetary policy adopted due to the limitations of traditional policy tools, as short-term interest rates were already near-zero. QE involved purchasing long-term securities, which significantly expanded the monetary base and was intended to stimulate aggregate demand by making credit more available.