The Federal Reserve Has Reduced the Use of Reserve Requirements

question 2

Multiple Choice

The Federal Reserve has reduced the use of reserve requirements as a monetary policy tool because:

• A)the Fed has focused on controlling short-term interest rates.
• B)of the increased use of sweep accounts.
• C)reserve requirements are a "tax" on banks .
• D)All of the above.
• E)a.and c.only.

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Definitions:

Operating Income

The profit realized from a business's core operations, calculated by subtracting operating expenses from gross income.

Extraordinary Gain

Unusual and infrequent gains that are outside the normal operations of a business, such as profits from selling a piece of land at a significantly higher price than its book value.

Component-Disposition Gains

Profits realized from the disposal of a component or part of an asset, often a segment of a larger asset that is sold separately.

Discontinued Operations

Components of a business that have been disposed of or are held for sale and are not part of the company’s future operations.