Reserve requirements are changed
A)more frequently than the discount rate is changed, but less frequently than open market operations are conducted.
B)more frequently than the discount rate is changed and more frequently than open market operations are conducted.
C)more frequently than open market operations are conducted, but less frequently than the discount rate is changed.
D)less frequently than open market operations are conducted and less frequently than the discount rate is changed.

Question

Quizplus · Accepted Answer

Reserve requirements are a tool used by central banks to control the money supply, but they are changed infrequently because such changes can cause significant adjustments in the banking sector. Open market operations, on the other hand, are conducted much more frequently as a way to manage liquidity and control short-term interest rates. The discount rate is adjusted more often than reserve requirements but less frequently than open market operations.

Reserve Requirements Are Changed