Consider the market for reserves, and suppose that the
supply curve currently intersects the demand curve in
the downward-sloping section of the demand curve. What
happens to the federal funds rate if the Fed increases the interest
rate it pays on reserves?
A.
If the increase in the interest rate on reserves is small,
the federal funds rate will increase
B.
The federal funds rate will definitely decrease
C.
The federal funds rate will definitely increase
D.
If the increase in the interest rate on reserves is large,
the federal funds rate will increase
Consider the market for reserves, and suppose that the supply curve currently intersects the demand curve in the downw
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answerhappygod
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