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Monetary policy during the great recession

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Reference no: EM132506823

The Great Recession (2008) and Monetary Policy During the great recession (2008), Fed had a dramatic increase in money supply and reduced the Fed Fund Rate to 0 (the lowest it can get). It hasn't helped the recession much. The following is the time-series graph for monetary base (money supply, roughly). Answer the following questions based on this information.

(1) Why a 0 (nominal) interest rate didn't help the economy during the 2008 great recession? Write down the relevant equation and explain it clearly.

Reference no: EM132506823

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