The Fed Has Tended Not to Use Changes in the Reserve

question 86

Multiple Choice

The Fed has tended not to use changes in the reserve requirement as a means of controlling the money supply because

• A)only banks that are members of the Fed are subject to reserve requirements,and most banks do not belong to the Fed.
• B)a change in the reserve requirement has only a very small impact on the money supply.
• C)it is a crude monetary policy tool because a change in the requirement does not affect banks until about two weeks after the change is implemented.
• D)it takes a long time for the Congress to approve a change in the reserve requirement.

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Definitions:

Gini Coefficient

A measure of income distribution or inequality within a population, ranging from 0 (perfect equality) to 1 (perfect inequality).

Equal Distribution

A concept referring to a scenario where resources, wealth, or opportunities are shared evenly among all participants or members of a society.

Human Capital

The collective skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country.

Experience

The knowledge or skill obtained from direct participation in events or activities.