ecently, the Fed is paying banks interests for their required reserves and exces

Question

ecently, the Fed is paying banks interests for their required reserves and excess reserves. This is now the fourth policy tool for the Fed to control money supply (in addition to the three policy tools summarized on p. 423.). Then which of the following is most likely to be true if the Fed wants to decrease money supply?




A. The Fed should purchase government securities.

B. The Fed should increase both the discount rate and the required reserve ratio.

C. The Fed should increase the interest rate to pay banks for their required reserves and excess reserves.

D. Only A and C.

E. Only B and C.

Explanation / Answer

E

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.