A nation can determine how close it is to the classical range by considering its:

In 2008, the Fed created a new policy tool called

A) federal funds zero-rate, which required the Fed to lower the rate to near zero percent. B) open market operations, which required the Fed to buy securities from only the federal government. C) quantitative easing, which required the Fed to pay interest on required reserves. D) interest rate reductions, which allowed the Fed to lower interest rates paid to banks. E) quantitative easing, which allowed the Fed to buy private securities as well as government securities.

The smaller the currency drain, the

A) smaller the increase in the quantity of money from an increase in reserves. B) more likely it is that the banking system will hold a larger proportion of excess reserves. C) the smaller the effect of a change in the discount rate. D) larger the increase in the quantity of money from an increase in reserves.