In the Market for Reserves,if the Federal Funds Rate Is

question 78

Multiple Choice

In the market for reserves,if the federal funds rate is between the discount rate and the interest rate paid on excess reserves,a decline in the reserve requirement ________ the ________ curve of reserves and causes the federal funds interest rate to fall,everything else held constant.

• A)decreases;demand
• B)increases;demand
• C)increases;supply
• D)decreases;supply

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Definitions:

Holder's Actions

Decisions or moves made by the individual or entity that possesses or controls a financial instrument or legal document.

Presentment

A demand for acceptance or payment of a negotiable instrument made upon the maker, acceptor, or drawee by or on behalf of the holder of the instrument.

Instrument

A legal document formally evidencing an obligation or right, such as checks, promissory notes, or securities.

Holder

A person who is in possession of a negotiable instrument that is issued or indorsed to that person’s order or to bearer.