As a Result of Policy Actions Taken by the Fed

question 332

Multiple Choice

As a result of policy actions taken by the Fed since 2008, it (the Fed) can no longer expect to affect the federal funds rate through traditional open market operations to alter the overall amount of excess reserves in the banking system. This is because

• A) Congress has taken this power away from the Fed.
• B) there is a massive amount of excess reserves already in the banking system.
• C) the federal funds rate has become rigidly fixed by law.
• D) banks are no longer holding any excess reserves.

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Definitions:

Conventional

Adhering to accepted standards and norms; traditional or typical in style or behavior.

Openness

A personality trait that involves the appreciation for new experiences, creativity, and a willingness to explore novel ideas.

Self-rating

An evaluative process in which individuals assess their own performance, characteristics, or conditions.

Design Principle

Fundamental guideline or standard that directs the design of objects, systems, or environments.