Which of the following is false?
A)Retail sweep accounts "sweep" balances out of transactions accounts that are subject to reserve requirements and into other accounts that are not.
B)Retail sweep accounts have experienced enormous growth since they were introduced in 1994.
C)Because of retail sweep accounts, required reserves have fallen significantly.
D)The decline in required reserves due to retail sweep accounts gives the Fed more precise control over the fed funds rate and the implementation of monetary policy.

Question

Quizplus · Accepted Answer

The decline in required reserves due to retail sweep accounts actually makes it more challenging for the Federal Reserve to control the fed funds rate and implement monetary policy effectively. This is because the reduction in reserves can lead to greater volatility in the demand for reserves, making it harder for the Fed to maintain its target rate through open market operations.

Which of the Following Is False