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Using graphs of the market for reserves, indicate what happens to the federal funds rate (the cash rate in Australia), borrowed reserves, and nonborrowed reserves

Using graphs of the market for reserves, indicate what happens to the federal funds rate (the cash rate in Australia), borrowed reserves, and nonborrowed reserves in the following situations holding everything else constant. Note that different starting positions of the graph can result in different results; your answer must cover all potential scenarios.

(a)The Fed (central bank) reduces the required reserve ratio

(b)The Fed (central bank) reduces the target federal funds rate.

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