For decades, the reserve requirement has rarely been used as a tool of monetary policy because:Multiple choice question.it is difficult to determine the impact of such a change so other tools are used instead.most banks keep excess reserves anyway so such a change would not have much impact.this would require Congressional approval and that is too cumbersome for the Fed.frequently changing the reserve requirement would be very disruptive to the banking sector and credit markets.

The reserve requirement refers to which tool of monetary policy?A.The ability to offer loans to banks at discounted ratesB.The ability to buy and sell treasury securities on an open marketC.The ability to adjust interest rates for investors who purchase stocksD.The ability to force banks to set aside a certain amount of moneySUBMITarrow_backPREVIOUS

Which of the following is true regarding the reserve requirements?Select the correct answer below:The Fed often makes large changes to them because they are a power monetary policy tool.The Fed does not change them much at all because taxation is a more impactful monetary policy tool.The Fed uses them more than other tools in order to achieve monetary policy goals.The Fed makes small changes to them almost every year.

If reserve requirements were eliminated in the future, as some economists advocate, whateffects would this have on the size of money market mutual funds?

The Federal Reserve has determined excess reserves will need to decrease by $750 billion in order to return the economy to full employment. To achieve this goal, the Federal Reserve shouldMultiple choice question.reduce the marginal propensity to consume.increase the interest rate paid on reserves.increase the marginal propensity to consume.reduce the interest rate paid on reserves.

Which monetary tool is used to control the amount of money that banks are required to hold as reserves?  A. Open market operations  B. The federal funds rate  C. The reserve requirement  D. Quantitative easing