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Sweep Accounts Have Caused an Increase in the Volatility of the Fed

Question 49

Multiple Choice

Sweep accounts have caused an increase in the volatility of the Fed funds market due to the lessened supply of tradable reserves. This is of some concern to the Federal Reserve since:


A) Sweep accounts are inherently unprofitable for banks
B) The Fed funds rate is the Federal Reserve's prime instrumental target for achieving the goals of monetary policy
C) Volatility in the Fed funds market will lead to volatility in the T-bill market
D) All of the above
E) None of the above

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