Why Is It Easier for the Fed to Manage the Level

question 5

Multiple Choice

Why is it easier for the Fed to manage the level of bank reserves using the term auction facility (TAF) as opposed to using discount window lending?

• A)Banks do not need to overcome the stigma of requesting a loan when using the TAF.
• B)Banks receive TAF proceeds on a 3-day delay, rather than on the day they are requested.
• C)Banks that use seasonal credit are more likely to use the term auction facility.
• D)Banks receive TAF proceeds after a lengthy verification process.

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