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Using the supply and demand analysis of the market for reserves in Canada, indicate what happens to the overnight interest rate, borrowed reserves, and non

Using the supply and demand analysis of the market for reserves in Canada, indicate what happens to the

overnight interest rate, borrowed reserves, and non borrowed reserves, holding everthing else constant under the

following circumstances:

i. Economy is surprisingly strong, leading to an increase in chequable deposits

ii. Quantitative Easing undertaken by Bank of Canada when short term interest rates are at the zero

lower bound

iii. Bank of Canada raises the target for the overnight interest rate

iv. Bank of Canada increases the interest rate on reserves above the current equilibrium overnight

interest rate

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