Prior to 2008, the Federal Reserve did not pay interest on reserves held by banks at the Federal Reserve. Many analysts argued that the requirement to hold reserves placed a tax on banks. How would you measure the tax? discount rate Fed funds rate (FFR) interest rate on excess reserves (IROER) the difference between the fed funds rate (FFR) and the interest rate on reserves (IOR)
Prior to 2008, the Federal Reserve did not pay interest on reserves held by banks at the Federal Reserve. Many analysts argued that the requirement to hold reserves placed a tax on banks. How would you measure the tax? discount rate Fed funds rate (FFR) interest rate on excess reserves (IROER) the difference between the fed funds rate (FFR) and the interest rate on reserves (IOR)
Chapter19: Money Creation
Section: Chapter Questions
Problem 13SQ
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Prior to 2008, the Federal Reserve did not pay interest on reserves held by banks at the Federal Reserve. Many analysts argued that the requirement to hold reserves placed a tax on banks. How would you measure the tax?
- discount rate
- Fed funds rate (FFR)
- interest rate on
excess reserves (IROER) - the difference between the fed funds rate (FFR) and the interest rate on reserves (IOR)
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