Draw a diagram that accurately reflects the information

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Reference no: EM133433645

Question: Suppose that the discount rate is currently 7%, the federal funds rate is 7%, and the interest on reserves is 3%. Also, the level of non-borrowed reserves is $26 and there are $2 of borrowed reserves.
a) Draw a diagram that accurately reflects the information provided above.
b) Suppose the Federal Reserve decided to reduce the discount rate from 7% to 5%, show the effects
of this on the diagram you drew in part a)

Reference no: EM133433645

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