According to Friedman and Schwartz, what was the consequence for the U.S. money

Question

According to Friedman and Schwartz, what was the consequence for the U.S. money supply of the Federal Reserves “crime of commission?”

a. It taught banks to better manage their reserves and thereby helped end the depression
b.    It dramatically reduced the money supply and turned a bad recession into a terrible depression
c.    It had little effect because the money supply never affects real GDP
d.    It made many banker criminals because they went along with the crime

Milton Friedman and Anna Schwartz looked at Federal Reserve policies in the first few years of the Great Depression. They found two specific events in which Federal Reserve policies amounted to “crimes of omission.” Identify the “crime of omission” that occurred in the last quarter of 1930

a.    The Federal Reserve decided to support the Gold Standard and ignored its primary mandate
b.    The Federal Reserve allowed banks to fail due to bank runs
c.    The Federal Reserve increased the money supply too quickly
d.    The Federal Reserve increased the money supply too slowly
e.    The Federal Reserve raised the discount rate, but left the Federal Funds rate unchanged

Explanation / Answer

b.    It dramatically reduced the money supply and turned a bad recession into a terrible depression

b.    The Federal Reserve allowed banks to fail due to bank runs

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