he interest rate on reserves is the interest rate that the Fed pays banks for holding reserves on deposit at the Fed. For many years, open market operations were the Fed’s primary tool for monetary policy. However, since October 2008, it relies more on interest on reserves. A decrease in the interest rate on reserves tends to (decrease or increase) the reserve ratio, (decreases or increases) the money multiplier, and (decrease or increase) the money supply.
he interest rate on reserves is the interest rate that the Fed pays banks for holding reserves on deposit at the Fed. For many years, open market operations were the Fed’s primary tool for monetary policy. However, since October 2008, it relies more on interest on reserves. A decrease in the interest rate on reserves tends to (decrease or increase) the reserve ratio, (decreases or increases) the money multiplier, and (decrease or increase) the money supply.
Chapter19: Money Creation
Section: Chapter Questions
Problem 12SQ
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The interest rate on reserves is the interest rate that the Fed pays banks for holding reserves on deposit at the Fed. For many years, open market operations were the Fed’s primary tool for
A decrease in the interest rate on reserves tends to (decrease or increase) the reserve ratio, (decreases or increases) the money multiplier, and (decrease or increase) the money supply.
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