The Economics of Money, Banking, and Financial Markets 10th Edition by Frederic Mishkin

Exercise 20

Using the supply and demand analysis of the market for resemes, indicate what happens to the federal funds rate, borrowed reserves, and nonborrowed resemes, holding everything else constant, under the following situations.
a. The economy is surprisingly strong, leading to an increase in the amount of checkable deposits.
b. Banks expect an unusually large increase in withdrawals from checking deposit accounts in the future.
c. The Fed raises the target federal funds rate.
d. The Fed raises the interest rate on reserves above the current equilibrium federal funds rate.
e. The Fed reduces reserve requirements.
f. The Fed reduces reseme requirements and then offsets this action by conducting an open market sale of securities.