Reserve Demand Becomes Horizontal at the IOER Rate Because

question 16

Multiple Choice

 Reserve demand becomes horizontal at the IOER rate because:

• A) banks will not make loans at less than the IOER rate.
• B) banks must earn more than the IOER rate to lend.
• C) the reserve supply is always set by the Fed so that the federal funds rate is greater than the IOER rate.
• D) the IOER rate is the upper bound of the target federal funds rate

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