Which of the following is a potential operating instrument for the central bank?
A) Nonborrowed reserves
B) The overnight funds rate
C) The monetary base
D) Each of the above

Question

Quizplus · Accepted Answer

Each of the options listed is a potential operating instrument for the central bank. 
- Nonborrowed reserves are reserves that banks hold at the central bank that are not borrowed from the central bank. The central bank can influence levels of nonborrowed reserves through its monetary policy operations. 
- The overnight funds rate is the interest rate at which banks lend and borrow reserves from one another overnight. The central bank can influence this rate through its monetary policy operations. 
- The monetary base is the sum of currency in circulation and reserves held by banks at the central bank. The central bank can influence the size of the monetary base through its open market operations, discount window lending, and other tools.

Which of the Following Is a Potential Operating Instrument for the Central