Explain factors which influencing excess reserve

Reference no: EM1314367

Analyze the factors that influence the banks desired excess reserve ratio, r_e. What would happen to the magnitude of r_e if:

a) The Fed surprises financial markets by sharply boosting the discount rate?

b) The FDIC reduces the deposit insurance ceiling from $100,000 to $1,000?

c) Short-term interest rates rise sharply?

d) The economy slumps into a Japanese-style deflationary spiral

Reference no: EM1314367

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