When the Federal Reserve increases the Federal funds rate

Question

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When the Federal Reserve increases the Federal funds rate, it becomes more expensive for banks to borrow money from each other. This leads to a decrease in the quantity of reserves as banks try to hold onto their cash. Consequently, with fewer reserves, banks reduce the amount of loans they issue and the quantity of deposits they can support, leading to a decrease in both the quantity of deposits and bank loans.

When the Federal Reserve Increases the Federal Funds Rate