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In a recent meeting (January 16, 2020) of the Federal Open Market Committee (FOMC), the Federal Reserve eliminated the reserve requirement on deposits and other
In a recent meeting (January 16, 2020) of the Federal Open Market Committee (FOMC), the Federal Reserve eliminated the reserve requirement on deposits and other reserve items at banks and other depository institutions up to $16.9 million and reduced the reserve ratio to 3% on amounts $16.9 to $127.5 million.What is likely to happen to interest rates in the economy as a consequence? Use the loanable funds theory of interest rate to explain your answer.
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