US Federal Reserve system

1.In August 2014, the US banks excess reserves (NBR) were equal to $2.699 trillion while they reached $2.087 trillionin January 2018due to the historic ending of the Fed's QE programs.

2. Since January 2009, the monthly average interest rate paid by the Federal Reserve Bank on both required reserve and excess reserve balances has been 25 basis points (0.25%).

3. The federal funds rate (overnight rate)in 2014was 0.25%, while it was equal to 1.75%in 2018.

4. The Discount Ratein 2014was 0.75%, while it was 2.25%in 2018.

Question1:

A)Using the previous information, showgraphicallythe equilibrium in the market for reserves in 2014. Make sure you determine the equilibrium federal funds rate.

B) In a separategraph, show the impact of the US Federal Reserve Bank's monetary policy on the market for reserves in 2018. Make sure you include the initial equilibrium in 2014 in this graph.

Questions2:

Explain in detailthe different arguments for and against the Federal Reserve Bank independence