Suppose the Fed would like to increase the FFR target from 4.5%
(current target) to 5%...
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Economics
Suppose the Fed would like to increase the FFR target from 4.5%
(current target) to 5% (new target). Which of the following is
correct? A. The Fed will have to increase the supply of reserves to
the banking system. This will shift the RS curve to the right,
hence push the FFR above the current level. B. The Fed will have to
increase the demand of reserves to the banking system. This will
shift the RD curve to the right, hence push the FFR above the
current level. C. The Fed will have to decrease the supply of
reserves to the banking system. This will shift the RS curve to the
left, hence push the FFR above the current level. D. The Fed will
have to decrease the demand of reserves to the banking system. This
will shift the RD curve to the left, hence push the FFR above the
current level.
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