Consider the market for reserves. Suppose that the Fed reduces the discount​ rate, that​ is, the interest rate it charge

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answerhappygod
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Consider the market for reserves. Suppose that the Fed reduces the discount​ rate, that​ is, the interest rate it charge

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Consider the market for reserves. Suppose that the Fed reduces
the discount​ rate, that​ is, the interest rate it
charges banks on the discount window for emergency loans. What
happens to the federal funds​ rate?
A.
The federal funds rate falls
B.
The federal funds rate increases
C.
The federal funds rate does not change
D.
The effect cannot be determined without additional
information
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