When banks hold a large amount of excess reserves, which of the following tools would the Fed most likely use to encourage banks to lend more of these excess reserves?

Question

Quizplus · Accepted Answer

Lowering the interest rate it pays to banks on their reserves would provide less incentive for banks to hold excess reserves and encourage more lending. Lowering the reserve requirement or discount rate or making an open market sale may also encourage more lending, but they may have other effects on the economy that the Fed may want to avoid.

When Banks Hold a Large Amount of Excess Reserves, Which