Question: Answer the following question: Using the supply and demand analysis of the market for reserves, indicate what happens to the federal funds rate (the cash

Answer the following question:

Using the supply and demand analysis of the market for reserves, indicate what happens to the federal funds rate (the cash rate in Australia), borrowed reserves, and nonborrowed reserves in the following situations holding everything else constant. (a) The Fed (central bank) raises the target federal funds rate. (5 marks) (b) The Fed (central bank) raises the interest rate on reserves above the current equilibrium federal funds rate (the cash rate)

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