Q. 6 (2 points) The Great Depression that occurred in October 1929 and lasted for more than 10 years was the worst economic contraction. In particular, the Great Depression was at the deepest trough in 1933. During the Great Depression years of 1930 1933, some 9000 banks out of the countrys 25,000 banks went bankrupt. In order to halt severe bank runs, President Roosevelt proclaimed a bank holiday that closed all banks in the United States in May 1933. There are several different explanations of the cause of the Great Depression. Some economists such as Milton Friedman (Nobel Laureate) maintain that the Fed failed to provide adequate money and credit to the banking system. After reading Epilogue: The Money Multiplier and the Money Supply During the Great Depression (pp. 100 101), answer the following questions:

(1) What happened to the currency-deposit ratio (C/D) from October 1929 to March 1933?

(2) What happened to the excess reserve-deposit ratio (ER/D) from October 1929 to March 1933?

(3) What happened to the money multiplier (mm) from October 1929 to March 1933?

(4) What happened to the monetary base (MB) from October 1929 to March 1933?

(5) What happened to the money supply (C/D) from October 1929 to March 1933?

(6) Do you agree to Milton Friedmans explanation of the cause of the Great Depression?