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44
What did the Fed do about bank failures? What did this cause solvent banks to do and what were the effects of it?
The Fed did nothing, even though it should have acted as a lender of last resort.
Banks "shored up" reserves by reducing outstanding loans.
This decreased M,
which decreased C and I,
which decreased the GDP. (M=kPY)
Banks "shored up" reserves by reducing outstanding loans.
This decreased M,
which decreased C and I,
which decreased the GDP. (M=kPY)
Flashcard info:
Author: savhighsmith
Main topic: Economics
Topic: History of Economics
School / Univ.: UGA
City: Athens
Published: 11.12.2010