How could reduce the ffr current equilibrium level

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Problem 1: Ninety-one-day Treasury bills carry an investment yield (IR) of 1.75 percent. What is their purchase price? What is their discount rate (DR)?

Problem 2: If the total supply of nonborrowed reserves equals $500 million and borrowed reserves are $50 million at the current equilibrium federal funds rate (FFR), and if the supply of total reserves is described by the following equation:

S=$530 million + $400 million FFR

What is the equilibrium FFR? What could the central bank do to increase the FFR above its current equilibrium level? How could it reduce the FFR below its current equilibrium level?

Reference no: EM132966307

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