What is the primary reason for the shift from limited to ample reserves?

Federal Reserve Interest on Reserves

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Business
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11th - 12th Grade
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Hard

Patricia Brown
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10 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The FED's decision to increase interest rates.
The removal of the required reserve by the FED.
A decrease in the money supply.
The introduction of new currency notes.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is NOT a traditional tool of monetary policy?
Interest on reserves
Required reserve
Discount rate
Open market operations
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How does the FED use interest on reserves to influence monetary policy?
By setting a fixed exchange rate.
By printing more money.
By adjusting the interest rate paid to banks.
By changing the currency design.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What happens when the FED lowers the interest on reserves?
Banks face higher taxes.
Banks are encouraged to lend more.
Banks are discouraged from lending.
Banks are encouraged to keep money with the FED.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the effect of increasing the interest on reserves?
It has no effect on banks' behavior.
It encourages banks to deposit money with the FED.
It encourages banks to lend more.
It discourages banks from depositing money with the FED.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What happens to the money supply when the FED lowers the interest on reserves?
The money supply remains unchanged.
The money supply decreases.
The money supply is unaffected by interest rates.
The money supply increases.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why is the FED finding it challenging to adjust interest rates currently?
Due to a lack of reserves.
Because of high inflation rates.
Due to a surplus of currency notes.
Because of low demand for loans.
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