Which of the following actions by the Fed most likely increase commercial bank lending?

Question

Quizplus · Accepted Answer

Reducing the interest paid on reserves held at the Fed would decrease the incentive for banks to hold excess reserves at the Fed, which would encourage them to instead lend out those reserves to the public, thereby increasing commercial bank lending. The other options would likely have the opposite effect and decrease commercial bank lending.

Which of the Following Actions by the Fed Most Likely