An Interesting Development That Happened in Late 2008, Relating to the Fed

question 117

Multiple Choice

An interesting development that happened in late 2008, relating to the Fed and bank reserves, is that the Fed:

• A) Reduced the reserve ratio drastically
• B) Required banks to hold more excess reserves
• C) Started paying interest on the banks' reserves
• D) Gave back all the reserves to the banks to hold as vault cash

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Definitions:

Business Transactions

Activities that involve the exchange of goods, services, or money between businesses or individuals.

Organization's Profitability

A measure of the efficiency and financial success of an organization, determined by the extent to which its income exceeds its costs and expenses.

Period of Time

A specific duration marked by a beginning and an end, often used to describe or measure events or changes.