Which of the following tools does the Fed use to help protect depositors who may want to withdraw their money without notice?
A)Discount rate
B)Interest rate
C)Open market operation
D)Reserve requirement

Question

Quizplus · Accepted Answer

The reserve requirement is a tool used by the Fed to ensure that banks hold a certain percentage of deposits in reserve to meet depositor withdrawals. This helps protect depositors who may want to withdraw their money without notice. By requiring banks to hold reserves, the Fed can prevent banks from becoming insolvent and protect depositors from losing their money. The other tools listed (discount rate, interest rate, open market operation) do not directly protect depositors in this way.

Which of the Following Tools Does the Fed Use to Help