Scenario: The following figure shows the federal funds market. Assume that the market of reserves is in equilibrium at point (R₀, i₀) .
-Refer to the scenario above.If the Fed uses an expansionary monetary policy,the new equilibrium quantity of reserves is ________ and the new federal funds rate is ________.
A) R₁; i₀
B) R₁; i₁
C) R₂; i₂
D) R₂; i₀
Correct Answer:
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