Economic

How low would the Fed need to reduce the discount rate id on loans it directly makes to financial firms in order toincrease the level of reserves in the financial system? What would then be the relation between total reserves and"non-borrowed reserves"? Why would the Fed do this?

Federal With excess supply of Funds Rate reserves at in, the federal funds rate falls to i,. id RS i # With excess demand loer for reserves at i", the Rd federal funds rate rises to in. NBR Quantity of Reserves, R