) Using the market for reserves graph, show what will happen to the federal funds rate inequilibrium if the central bank performs an open market sale for $20 millions.Consider the following information:Reserve requirements (rr)Excess Reserves ratio (e)Currency deposits ratio (c)7%1%70%Calculate the money multiplier as well the change in the money supply when the central bank loansout $30 million to the banking system. Show your work.

Answered: ) Using the market for reserves graph,…

) Using the market for reserves graph, show what will happen to the federal funds rate in equilibrium if the central bank performs an open market sale for $20 millions.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

) Using the market for reserves graph, show what will happen to the federal funds rate in
equilibrium if the central bank performs an open market sale for $20 millions.
Consider the following information:
Reserve requirements (rr)
Excess Reserves ratio (e)
Currency deposits ratio (c)
7%
1%
70%
Calculate the money multiplier as well the change in the money supply when the central bank loans
out $30 million to the banking system. Show your work.

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Please see attached.