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If Banks Borrowed from the Fed When the Federal Funds

Question 26

Multiple Choice

If banks borrowed from the Fed when the federal funds rate was below its target level


A) the supply of reserves would decrease and the federal funds rate could fall even further.
B) the supply of reserves would increase and the federal funds rate would rise.
C) the supply of reserves would decrease and the federal funds rate would rise.
D) the supply of reserves would increase and the federal funds rate could fall even further.

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