Why Didn't the Fed's Quantitative Easing Policies Exert a Stronger

Multiple Choice

Why didn't the Fed's quantitative easing policies exert a stronger impact on aggregate demand and lead to a more rapid recovery during 2010-2012?

A) The low interest rates accompanying the policy failed to increase stock prices.
B) Even though the Fed made additional reserves available to the banking system, the policy did not result in lower interest rates.
C) The velocity of money increased, partially offsetting the impact of the Fed's low interest rate policy.
D) The earnings of senior citizens and others from money market accounts, saving deposits, and other forms of savings fell, reducing their incentive to spend and thereby increasing aggregate demand.