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In a Corridor System, If the Excess Demand for Reserves

Question 6

Multiple Choice

In a corridor system, if the excess demand for reserves is zero when the overnight interest rate is lower than the central bank's target


A) the central bank should borrow to achieve its target.
B) the corridor system is not working.
C) the central bank should impose a reserve requirement.
D) the central bank should increase its deposit rate.
E) the central bank should lend to achieve its target.

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