U.S. paper currency is made with several features that are difficult to counterfeit, including a security thread, color-shifting ink, microprinting, a portrait, a watermark, and a fine-line printing pattern. As duplication technology, however, continually improves and more and more counterfeits are circulated, what will happen to the following?

• The value of money circulated.
• The volume of cashless transactions.
• The amount of money the U.S. Treasury spends to introduce additional security measures.

In November 2008, the Fed began to pay interest on reserves held at the bank.

• What effect would you expect on excess reserves?
• Did banks generally favor or oppose this action?
• Would central banks generally favor or oppose this action?
• What effect did this probably have on interest rates paid by banks?