The large increase in bank reserves at the fed

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Reference no: EM131303141

Karen Dynan, a former Federal Reserve economist now at the Brookings Institution, was quoted as stating:

The size of the Fed's balance sheet, which has more than doubled since the financial crisis of 2008, and the large amount of bank reserves sitting at the Fed has made officials at the central bank nervous about the potential for rapid inflation once banks decide to start lending more vigorously again.

a. What does Dynan mean by "the size of the Fed's balance sheet"?

b. Is there a connection between the Fed's balance sheet having doubled and the large increase in bank reserves at the Fed? Briefly explain.

Reference no: EM131303141

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