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.

Question

Quizplus · Accepted Answer

Reserve requirements have a powerful impact on the money supply, can create liquidity problems for banks, especially those with low excess reserves, and frequent changes complicate liquidity management for banks.

The Fed Is Reluctant to Use Reserve Requirements to Control