Raising the Interest Paid on Reserves Has the Effect of Making

question 265

Multiple Choice

Raising the interest paid on reserves has the effect of making it

• A) more costly for banks to hold excess reserves.
• B) less costly for banks to hold excess reserves.
• C) more attractive for banks to lend out their excess reserves.
• D) less attractive for banks to hold required reserves.

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Definitions:

Empirical

Based on observations or experience rather than theory or pure logic.

Rationally Constructed

Developed or created based on logical reasoning and thoughtful consideration.

Item Response Theory (IRT)

A theory and method used in education and psychology to model the relationship between individuals' skills or traits and their performance on test items.

Empirical Method

A scientific approach that relies on observation and experiment rather than theory or pure logic.