In class, we argued that alternative view to look at the equilibrium is to look at the market of bank reserves. (This is in fact, the FED's new approach to monetary policy) a Who supplies reserves? Who demands reserves? (0.5 pt) There are two types of rates: . The federal funds rate which is not "set" by the Fed, but rather determined by the borrowers and lenders in the federal funds market.. The interest on reserve balances rate ("IORB rate" ) is the interest rate paid on funds that banks hold in their reserve balance account at a Federal Reserve Bank. b Explain why can we call the IORB rate the bank's reservation rate (Hint: Interest on reserve balances is a risk-free investment option for banks) (1 pt)