An article in the Wall Street Journal quoted Patrick Harker, president of the Federal Reserve Bank of Philadelphia, as saying that the Fed is “committed to implementing monetary policy in a regime of ample reserves, which, again, does not require active management of the supply of reserves.”

a. What does Harker mean by a “regime of ample reserves”?

b. How does the Fed implement monetary policy in a regime of ample reserves if it doesn’t actively manage the supply of reserves to the banking system?

c. Prior to 2008, did the Fed actively manage the supply of reserves? Briefly explain.