Question

The sharp increase in the excess reserves held by the commercial banking system since the second half of 2008 increases the potential for

Answer 1

The sharp increase in excess reserves held by the commercial banking system since the second half of 2008 increases the potential for a decline in convenience and safety of transactions throughout the economy.

Step-by-step explanation:

In the context of the question, the sharp increase in the excess reserves held by the commercial banking system since the second half of 2008 increases the potential for a decline in convenience and safety of transactions throughout the economy. This is because banks may become hesitant to lend during economic uncertainty, which can lead to loans becoming less available and hurting sectors of the economy that rely on borrowed money, such as business investment, home construction, and car manufacturing.