Question of 21 > The Bank of Key West is not going to have enough reserves...

 

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Question of 21 > The Bank of Key West is not going to have enough reserves at the end of the business day to meet its reserve requirement of 10%. It currently has two options to borrow money overnight in order to meet the requirement. First, it could borrow money from the Federal Reserve at a rate of 0.75%. Second, it could borrow money from other banks at a rate of 0.35%. What is the federal funds rate, and what is the discount rate? federal funds rate: % discount rate: What will happen to other short-term interest rates if the Fed increases its federal funds rate target? They will decrease. They will become irrelevant. O They will remain unchanged. O They will also increase: Question of 21 > The Bank of Key West is not going to have enough reserves at the end of the business day to meet its reserve requirement of 10%. It currently has two options to borrow money overnight in order to meet the requirement. First, it could borrow money from the Federal Reserve at a rate of 0.75%. Second, it could borrow money from other banks at a rate of 0.35%. What is the federal funds rate, and what is the discount rate? federal funds rate: % discount rate: What will happen to other short-term interest rates if the Fed increases its federal funds rate target? They will decrease. They will become irrelevant. O They will remain unchanged. O They will also increase:

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