If the Fed raised the reserve requirement, the demand for reserves would

a. increase, so the federal funds rate would fall.

b. increase, so the federal funds rate would rise.

c. decrease, so the federal funds rate would fall.

d. decrease, so the federal funds rate would rise

Question

Business

Seamus Chavez

30 May, 02:03

If the Fed raised the reserve requirement, the demand for reserves would

a. increase, so the federal funds rate would fall.

b. increase, so the federal funds rate would rise.

c. decrease, so the federal funds rate would fall.

d. decrease, so the federal funds rate would rise

+1

Answers (1)

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Gillespie · Answer 1

b. increase, so the federal funds rate would rise.

Explanation:

When reserve requirement is raised then more money is to be kept in reserves. it causes in the increase in the demand of reserves. Further, the increase in demand of reserves pushes the federal fund rate on a higher side and it also rises.

If the Fed raised the reserve requirement, the demand for reserves woulda. increase, so the federal funds rate would fall.b. increase, so the federal funds rate would rise.c. decrease, so the federal funds rate would fall.d. decrease, so the federal funds rate would rise

If the Fed raised the reserve requirement, the demand for reserves would

a. increase, so the federal funds rate would fall.

b. increase, so the federal funds rate would rise.

c. decrease, so the federal funds rate would fall.

d. decrease, so the federal funds rate would rise