Which of the Following Is NOT an Argument for the Federal

question 10

Multiple Choice

Which of the following is NOT an argument for the Federal Reserve paying interest on excess reserve holdings?

• A) Paying interest reduces the effective tax on deposits.
• B) Paying interest will help in the implementation of monetary policy.
• C) Paying interest will help the Federal Reserve have more control of the amount of discount loans.
• D) Paying interest increases the capacity of the Fed's balance sheet which will make it easier to address financial crises.

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