The Federal Reserve has reduced the use of reserve requirements as a monetary policy tool because:
A)the Fed has focused on controlling short-term interest rates.
B)of the increased use of sweep accounts.
C)reserve requirements are a "tax" on banks .
D)All of the above.
E)a.and c.only.

Question

Quizplus · Accepted Answer

The Federal Reserve has reduced the use of reserve requirements as a monetary policy tool because it has shifted its focus to controlling short-term interest rates and there has been an increased use of sweep accounts. Additionally, reserve requirements are viewed as a "tax" on banks and can limit their ability to lend and stimulate the economy. Therefore, all of these factors have contributed to the reduced use of reserve requirements as a monetary policy tool by the Fed.

The Federal Reserve Has Reduced the Use of Reserve Requirements