The graph to the right ilustrates how the Fed uses discounting to keep the federal funds rate from rising far above the federal funds target. It shows a rightward shift of the demand curve for reserves from R; to R. The initial equilibrium is at point 1, where the discount rate (e) is above the federal funds rate, which is equal to its target level, i The shift moves the equilibrium to point 2, where the federal funds rate equals the discount rate (-4). According to this graph, at point 2, borrowed reserves are A. equal to the distance between B and C B. equal to the distance between A and B C. equal to the distance between A and C D. zero 0000

The graph to the right ilustrates how the Fed uses discounting to keep the federal funds rate from rising far above the federal funds target. It shows a rightward shift of the demand curve for reserves from R; to R. The initial equilibrium is at point 1, where the discount rate (e) is above the federal funds rate, which is equal to its target level, i The shift moves the equilibrium to point 2, where the federal funds rate equals the discount rate (-4). According to this graph, at point 2, borrowed reserves are A. equal to the distance between B and C B. equal to the distance between A and B C. equal to the distance between A and C D. zero 0000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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