Question 1 1 pts Why is the supply function for federal funds vertical up to the level of the discount rate? O a. Because the Fed has complete control on the amount of total reserves. O b. Because the Fed does not have complete control on the amount of total reserves. O c. Because only banks can change the amount of total reserves. O d. Because only depositors can change the amount of total reserves. O e. Because banks and depositors cannot change the amount of total reserves. Question 2 1 pts Why is the supply function for federal funds flat (horizontal) at the level of the discount rate? O a. Because the Fed refuses to lend money to commercial banks at or above the discount rate. O b. Because the Fed wants to keep the discount rate above the interest rate it pays on bank reserves. O c. Because the Fed wants to keep the discount rate above the equilibrium federal funds rate. O d. Because the Fed supplies loans to commercial banks at the discount rate as much as banks want to borrow. O e. Because if the equilibrium federal funds rate is above the discount rate. banks will borrow from other banks rather than from the Fed. Question 3 1 pts Why is the demand function for federal funds flat (horizontal) at the level of interest rate on reserves (IOR)? O a. Because the Fed would refuse to lend to banks at any federal funds rate below IOR. O b. Because the Fed would refuse to lend to banks at any federal funds rate above IOR. O c. Because banks would refuse to lend to other banks if the fed funds rate equals IOR. O d. Because banks would want to lend all of their reserves to other banks if the fed funds rate equals IOR. O e. Because if the fed funds rate equals IOR, the Fed will supply as much reserves to the banks as they want