Question
Which of the following statements is NOT correct? The supply of reserves, drawn as a function of the interbank interest rate, A. is a decreasing
Which of the following statements is NOT correct? The supply of reserves, drawn as a function of the interbank interest rate,
A. | is a decreasing function because the interbank rate is an opportunity cost. | |
B. | has its position affected by the operations of the government with households. | |
C. | has a kink at the lending facility rate because at that rate banks are indifferent between borrowing in the interbank market and borrowing from the central bank. | |
D. | is inelastic to the interbank interest rate for levels below the lending facility rate because commercial banks do not use the lending facility. |
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