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RichaDuggi13 RichaDuggi13
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A year ago
Scenario: The following figure shows the federal funds market. Assume that the market of reserves is in equilibrium at $500 billion in reserves and a 3 percent federal funds rate.




Refer to the scenario above. If the Fed completes an open market purchase of bonds that changes the quantity of reserves by $400 billion, then the federal funds rate will ________.

▸ decrease by 2 percent

▸ increase by 2 percent

▸ increase by 5 percent

▸ decrease by 1 percent
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Macroeconomics

Macroeconomics


Edition: 3rd
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CrazyW27CrazyW27
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A year ago
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RichaDuggi13 Author
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A year ago
Thanks
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You make an excellent tutor!
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