How does the fed take money out of the banking system

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Reference no: EM13737192

The Federal Reserve took money out of the banking system to raise the federal funds rate-the rate at which banks lend each other money overnight-from 4 percent to 4.5 percent.

a. How does the Fed take money out of the banking system?

b. Explain how doing so would raise the federal funds rate.

Reference no: EM13737192

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