If a switch occurs from currency into deposits, what happens to the federal funds rate (central bank rate)? Use the supply and demand analysis of the market for reserves to explain your answer. Why is it that an increase in the discount rate does not normally lead to a decrease in borrowed reserves? Use the supply and demand analysis of the market for reserves to explain. 

Answer rating: 100% (QA)

Impact of Currency to Deposits Switch on Federal Funds Rate Scenario A switch occurs from currency into deposits Analysis Applying supply and demand a... View the full answer