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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