Question #2: Market for Reserves [20 Points] Suppose that the Federal Open Market Committee (FOMC) publishes a press release stating that the FOMC "decided to lower its target for the federal funds rate by 75 basis points (0.75%) to 3.5%. by conducting an open market purchase" The press release goes on to say that "in a related action the Board of Governors approved a 75 basis points (0.75%) decrease in the discount rate to 4%." (a) Use a demand and supply graph for the market of reserves to show the equilibrium federal funds rate and the discount rate before the announced policy action. Be sure to clearly indicate the initial discount rate and the initial fed fund rate. [8 Points] (b) Use your graph in Part (a) to show how the Fed would lower the federal funds rate by 75 basis points (0.75%). Also show in your graph the 75-basis point decrease in the discount rate [12 Points]