When the Fed began paying interest on reserves, reserve balances
A)increased dramatically.
B)decreased dramatically.
C)decreased only slightly.
D)increased only slightly.

Question

Quizplus · Accepted Answer

When the Federal Reserve started paying interest on reserves, it made holding reserves more attractive to banks, leading to a significant increase in reserve balances. This policy was intended to help manage the money supply and influence interest rates.

When the Fed Began Paying Interest on Reserves, Reserve Balances