For each of the following statements determine if the statement is TRUE, FALSE, or UNCERTAIN. You...

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For each of the following statements determine if the statement is TRUE, FALSE, or UNCERTAIN. You must justify your answer either graphically. No credit will be given without an explanation. [8 points each] (a) "If initially the equilibrium federal fund rate is equal to the interest paid on reserves, then an open market purchase will have no impact on the federal fund rate." (b) "If initially the equilibrium federal fund rate is greater than the interest rate paid on reserves, then an increase in the interest paid on reserves will increase the federal fund rate.” (c) "If the equilibrium federal fund rate is initially between the discount rate and the interest paid on reserves, then a decrease in the required reserve ratio will decrease the equilibrium federal fund rate." For each of the following statements determine if the statement is TRUE, FALSE, or UNCERTAIN. You must justify your answer either graphically. No credit will be given without an explanation. [8 points each] (a) "If initially the equilibrium federal fund rate is equal to the interest paid on reserves, then an open market purchase will have no impact on the federal fund rate." (b) "If initially the equilibrium federal fund rate is greater than the interest rate paid on reserves, then an increase in the interest paid on reserves will increase the federal fund rate.” (c) "If the equilibrium federal fund rate is initially between the discount rate and the interest paid on reserves, then a decrease in the required reserve ratio will decrease the equilibrium federal fund rate."

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