"Cash drains" are an example of a factor that complicates the Fed's ability to control the money supply.

Question

Quizplus · Accepted Answer

Cash drains occur when individuals withdraw large amounts of cash from banks, reducing the amount of reserves banks have available to lend. This can limit the effectiveness of the Federal Reserve's monetary policy tools aimed at controlling the money supply, as it reduces the predictability of the money multiplier effect.

"Cash Drains" Are an Example of a Factor That Complicates