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One morning the Open Market Account Manager at the New York Federal Reserve Bank observes that the equilibrium (market) federal funds rate is 2.25%. Suppose
One morning the Open Market Account Manager at the New York Federal Reserve Bank observes that the equilibrium (market) federal funds rate is 2.25%. Suppose the target federal funds rate is 3%. What does this indicate about total reserves in the banking system? What would the Account Manager decide to do (open market purchase or open market sale)
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