7) In the market for reserves, when the federal funds rate is above the interest rate paid on excess reserves, the demand curve for reserves is A) vertical. B) horizontal. C) positively sloped. D) negatively sloped. 8) In the market for reserves, if the federal funds rate is above the interest rate paid on excess reserves, an open market purchase the of reserves which causes the federal funds rate to fall, everything else held constant. A) increases, supply B) increases; demand C) decreases; supply D) decreases; demand 5) The interest rate charged on overnight loans of reserves between banks is the A) prime rate. B) discount rate. C) federal funds rate. D) Treasury bill rate. 6) The opportunity cost of holding excess reserves is the federal funds rate A) minus the discount rate. B) plus the discount rate. C) plus the interest rate paid on excess reserves. D) minus the interest rate paid on excess reserves