The Fed Seldom Exercises Its Power to Change the Legal

question 68

Multiple Choice

The Fed seldom exercises its power to change the legal reserve requirements because

• A) it lacks the authority to do so without prior congressional approval.
• B) such changes are limited to no more than one per year.
• C) this policy tool has a minimal effect on bank reserves because the limits are quite low.
• D) most commercial banks manage their reserves responsibly without the Fed's intervention.
• E) it is a drastic way to change bank reserves compared to open market operations.

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Actions that violate laws and are punishable by the state, ranging from theft to more severe crimes like assault or murder.

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