The Fed's Use of the Interest Rate It Pays Banks

question 1

Multiple Choice

The Fed's use of the interest rate it pays banks on their excess reserves

• A) is a tool the Fed has used effectively over the past several decades to control the money supply.
• B) is a tool that can be used to reduce the supply of money, but it cannot be used to expand it.
• C) is a monetary tool that the Fed introduced in 2008.
• D) is a tool that  could be used to expand the money supply, but it could not be used to reduce it.

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Definitions:

Cost Accounting System

A method of accounting that captures all costs associated with the production of goods or services to evaluate performance and make decisions.

Monitoring

Monitoring refers to the systematic process of observing, checking, and recording activities or data for a specific purpose, often to detect changes over time.

Planning Decisions

The process of making choices about the future direction and activities of an organization, often involving strategic and tactical goals.

Organization's Activities

The various tasks and operations carried out by a business or non-profit entity to achieve its goals and objectives.