The Fed Is Reluctant to Use Reserve Requirements to Control

question 114

Multiple Choice

The Fed is reluctant to use reserve requirements to control the money supply because

• A) of their overly-powerful impact on the money supply.
• B) they have the potential to create liquidity problems for banks with low excess reserves.
• C) frequent changes in reserve requirements complicate liquidity management for banks.
• D) of all of the above.
• E) of only A and B of the above.

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