In 2008, the Fed Began Paying Banks Interest on the Reserves

question 168

Essay

In 2008, the Fed began paying banks interest on the reserves they held at the Fed.
How did this change the incentives banks had for making loans?

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Definitions:

Behavior Therapies

Psychological treatment approaches focusing on modifying observable behaviors and dealing with mental health disorders.

Cognitive Therapy

A form of psychotherapy that aims to change patterns of thinking or behavior that are problematic, thus altering emotional states and dealing with disorders.

Bipolar Disorder

A mental health condition marked by extreme mood swings that include emotional highs (mania or hypomania) and lows (depression).

Dodo Bird Verdict

A metaphor stemming from Alice in Wonderland and used in psychology to suggest that different forms of therapy are equally effective.