As a result of policy actions taken by the Fed since 2008, it (the Fed) can no longer expect to affect the federal funds rate through traditional open market operations to alter the overall amount of excess reserves in the banking system.This is because
A)Congress has taken this power away from the Fed.
B)there is a massive amount of excess reserves already in the banking system.
C)the federal funds rate has become rigidly fixed by law.
D)banks are no longer holding any excess reserves.

Question

Quizplus · Accepted Answer

Since 2008, the Fed's policy actions, including quantitative easing, have led to a large amount of excess reserves in the banking system, making traditional open market operations less effective in influencing the federal funds rate.

As a Result of Policy Actions Taken by the Fed