Econ 200

Econ 200 Money and Banking

Revised Edition. Chapter 5 Quiz

What is the purpose of a Central Bank?

A: To create excess reserves for its constituents.

What is the basis of modern monetary policy?

A: To penalize said constituents for holding created excess reserves.

Why do Central Banks raise the IOER?

A: To create a pool of funds to pay the future penalty with.

 

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