vny does the Fed use the RRF rate as a supplem the interest on reserve balances rate? Because financial institutions can earn interest on resery

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter6: Government Influence On Exchange Rates
Section: Chapter Questions
Problem 2BIC
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Why does the Fed use the ON RRP rate as a supplement to
the interest on reserve balances rate?
Because financial institutions can earn interest on reserve
balances plus the ON RRP rate
Because the ON RRP rate is higher than the IORB rate
Because financial institutions that cannot earn the IORB rate
can earn the ON RRP rate
Because financial institutions that cannot earn the ON RRP
rate can earn the IORB rate
Transcribed Image Text:Why does the Fed use the ON RRP rate as a supplement to the interest on reserve balances rate? Because financial institutions can earn interest on reserve balances plus the ON RRP rate Because the ON RRP rate is higher than the IORB rate Because financial institutions that cannot earn the IORB rate can earn the ON RRP rate Because financial institutions that cannot earn the ON RRP rate can earn the IORB rate
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