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aramo023 aramo023
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A month 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. Suppose the Fed wants to raise the federal funds rate by 2 percent. To do this, the Fed will have to ________.

▸ buy $400 billion worth of bonds from a private bank

▸ sell $400 billion worth of bonds to a private bank

▸ sell less than $400 billion worth of bonds to a private bank

▸ buy less than $400 billion worth of bonds from a private bank
Textbook 

Macroeconomics


Edition: 3rd
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zexman911zexman911
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A month ago
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sell $400 billion worth of bonds to a private bank

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