The Federal Reserve currently implements monetary policy by setting a target for the federal funds rate.

a)Draw a diagram for thereservesmarket at an equilibrium where the actual value for the funds rate is equal to the target value set by the Fed.

b)Now assume that, at some point after the Fed's policy body has set its target for the funds rate, the actual (market) value of the funds rate has fallen below the Fed's target value.Would this signal that the Fed should take a contractionary action, an expansionary action, or do nothing?Explain how the change in the funds rate might have different interpretations and draw an appropriate diagram or diagrams to support your argument.