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Using the supply and demand analysis of the market for reserves, indicate what happens to the federal funds rate, borrowed reserves, and non-borrowed reserves, holding
- Using the supply and demand analysis of the market for reserves, indicate what happens to the federal funds rate, borrowed reserves, and non-borrowed reserves, holding everything else constant, under the following situations.
- Banks expect an unusually large increase in withdrawals from checking deposit accounts in the future.
- The Fed raises the target federal funds rate.
- The Fed reduces reserve requirements.
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