4.Draw a supply-demand diagram for the market for reserves to answer each of the following questions.

a.Drawa graph showing an increase in the discount rate which increases the federal funds rate.

b.Showthe effect of an increase in currency holding by the public on the federal funds rate.

c.Drawa graph showing the effect of a one percent increase in the interest rate on excess reserves which increases the federal funds rate by lessthan one percent.

d.TheFederal Reserve eliminates reserve requirements on deposits