You’ve learned about money its connection to inflation money supply and the monetary multiplier banking and money creation



You’ve learned about money, its connection to inflation, money supply, and the monetary multiplier, banking, and money creation. Try to apply your understanding of these concepts in analyzing our current situation: During the crisis and until now, the Fed bought a lot of securities from banks and other financial institutions. This made some people fear that the Fed’s actions would spark inflation. Yet, inflation hasn’t really shown up in our economy (and the Fed has been doing this for five years now). Explain why by answering the following questions:

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