Suppose banks incur heavy losses and become more cautious, increasing their demand for reserve. Make use of a graph of the loanable funds market to show how the Fed can use open market operations to maintain the same federal funds rate.

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The Answer of Suppose banks incur heavy losses and become more cautious, increasing their demand for reserve. Make use of a graph of the loanable funds market to show how the Fed can use open market operations to maintain the same federal funds rate.

Suppose Banks Incur Heavy Losses and Become More Cautious, Increasing