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1. Use the following market for reserves to answer the questions below. Federal Funds Rate Quantity of Reserves a. Label the amount of nonborrowed reserves,

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1. Use the following market for reserves to answer the questions below. Federal Funds Rate Quantity of Reserves a. Label the amount of nonborrowed reserves, the discount rate, ia, the rate paid on reserves, ion and the equilibrium federal funds rate, iff b. Show what happens when the Federal Reserve decides to increase the rate that they pay on reserves. What happens to the federal funds rate and the amount of nonborrowed reserves

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