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What should fed do to keep the federal funds rate unchanged

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Reference no: EM131082084

Using the supply and demand analysis of the market for reserves, indicate what happen to the federal funds rate under the following situations:

1. The Treasury has just paid a large bill to defense contractors and as a result its deposits with the Fed fall.

2. The Fed reduces reserve requirements

What should the Fed do to keep the federal funds rate unchanged?

Reference no: EM131082084

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