In the market for reserves,if the federal funds rate is between the discount rate and the interest rate paid on excess reserves,an increase in the reserve requirement ________ the ________ for reserves and causes the federal funds interest rate to rise,everything else held constant.

Question

Quizplus · Accepted Answer

An increase in the reserve requirement means banks need to hold more reserves, thus increasing the demand for reserves. This increased demand, with supply remaining constant, causes the federal funds interest rate to rise.

In the Market for Reserves,if the Federal Funds Rate Is