When the economy strengthens,following the period of quantitative easing,the Federal Reserve plans to keep a lid on money growth by

Question

Quizplus · Accepted Answer

Increasing the interest rate paid on reserves would incentivize banks to hold onto their reserves instead of lending them out, which would slow down the growth of the money supply. This would help the Federal Reserve keep a lid on money growth during a period of economic strength. Increasing reserve requirements or selling/buying dollars in foreign-exchange markets would not directly impact money growth.

When the Economy Strengthens,following the Period of Quantitative Easing,the Federal