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Question
In October 2008, the opportunity cost of holding excess reserves for U.S. DIs
A. increased because new reserve requirements imposed by the Federal Reserve as a result of the financial crisis.
B. decreased because subsidiary DIs were first allowed to issue commercial paper directly, rather than through the parent holding company.
C. decreased because the Federal Reserve began to pay interest to DIs on excess reserves held at the Fed.
D. increased because the Federal Reserve no longer accepted government securities as meeting excess reserve requirements.
E. None of the above.
Answer
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