Title: Monetary Policy (3/4): Reservation Rate and Arbitrage -- Video
Course: Andria Testing FRE2 > Section: Monetary Policy (3/4): Reservation Rate and Arbitrage -- Economic Lowdown Video Series

This video explains that the interest on reserve balances rate acts as a reservation rate for banks, and explains how arbitrage ensures that it is an effective tool for steering the federal funds rate into the FOMC’s target.

Watch the video and then click "next" to take the quiz.