From before the financial crisis began in September of 2007

From before the financial crisis began in September of 2007 to when the crisis was over at the end of 2009, the huge expansion in the Fed\'s balance sheet and the monetary base did not result in a large increase in monetary supply because

A) the discount loans decreased.
B) the Fed also increased the required reserve ratio.
C) the Fed also conducted open market sales.
D) most of it just flowed into holdings of excess reserves.

Solution

Though money supply is increased it channelised into hoarding of money which resulted into excess reserves. Hence no increase in Money supply therefore Option D is correct response