Describe what additional actions the fed would need to take

Reference no: EM132198994

Question: Use supply-and-demand graphs of the federal funds market to analyze the following situation: Suppose that the equilibrium federal funds rate is equal to the interest rate that the Fed is paying on reserve balances. If the Fed announces an end to its interest-on-reserves policy (i.e., the interest rate on reserve balances goes to zero), describe what additional actions the Fed would need to take in order to keep the federal funds rate at its current level. Explain fully.

Reference no: EM132198994

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