Question 18 1 pts The following graph shows a hypothetical demand function for federal funds. Currently, the total amount of reserves in the banking system is $50 billion, the discount rate is 3.5 percent, and interest on reserves equals IOR = 1 percent. If demand for federal funds increases by $40 billion, the equilibrium fed funds rate will equal: 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% Federal Funds Rate (FF R) 0.50% 0.00% $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 $130 $140 Bank Excess Reserves ($Billion) O a. FFR = 3.00% O b. FFR = 3.50% O c. FFR = 4.00% Q d. FFR = 4.50% 0 e. None of the above. Question 19 1 pts The following graph shows a hypothetical demand function for federal funds. Currently, the total amount of reserves in the banking system is $50 billion, the discount rate is 3.5 percent, and interest on reserves equals IOR = 1 percent. The Fed conducts an open market purchase of $40 billion. As a result, the equilibrium fed funds rate will equal: 5.50% 5.00% 4.50% 4.00% FFR) ( 9e 3 a? 3.00% 2.50% 2.00% 1.50% Federal Funds Rate 1.00% 0.50% 0.00% $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 $130 $140 Bank Excess Reserves ($Billion) O a. FFR = 2.00% O b. FFR = 1.50% O C. FFR = 1.00% Q d. FFR = 0.50% 0 e. None of the above