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6. Assume that the Fed significantly increases the interest rate it pays on banks' (excess) reserve balances. (a) Would the federal funds rate increase, decrease,

6. Assume that the Fed significantly increases the interest rate it pays on banks' (excess) reserve balances.

(a) Would the federal funds rate increase, decrease, or stay the same?

(b) Would the reserve ratio increase, decrease, or stay the same?

(c) Would the money supply increase, decrease, or stay the same?

explain

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