Which of the Following About Monetary Policy Is True

Multiple Choice

Which of the following about monetary policy is true?

A) If the Fed wants to increase the money supply, it should increase the interest rate it pays banks on their excess reserves.
B) When the Fed reduces the interest rate paid on excess reserves, it increases the incentive of commercial banks to hold excess reserves.
C) If the Fed wants to reduce the future growth rate of the money supply, it could do so by increasing the interest rate it pays banks on excess reserves.
D) When the Fed increases the interest rate it pays on excess reserves, this encourages banks to extend more loans and thereby increase the money supply.