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Shapes of the supply and demand curves for reserves

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Reference no: EM131117662

1. Draw and explain shapes of the supply and demand curves for reserves.

2. Illustrate by sketching the relevant figures,the situation on the market for reserves when:

a. The federal funds rate equals interest rate paid on excess reserves.

b. The federal funds interest rate is below the discount rate.

c. The equilibrium federal funds rate is 3%, the fed increases the interest rate paid on the excess reserves from 1% to 2%

Reference no: EM131117662

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