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Social Studies, 29.08.2019 01:10 fifamonkey3710

When the federal funds rate equals the interest rate paid on excess reserves a. the demand curve for reserves is vertical b. the demand curve for reserves is horizontal c. the supply curve of reserves is vertical d. the supply curve of reserves is horizontal

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Answer from: kleighlamb4850

B. the demand curve for reserves is horizontal

Explanation:

According to my research on various economic studies, I can say that based on the information provided within the question this would lead the demand curve for reserves is horizontal. This is because a higher federal funds rate means that there is a higher opportunity cost of holding reserves rather than lending them to banks. Therefore at the interest rate on reserves, the demand curve is horizontal.

I hope this answered your question. If you have any more questions feel free to ask away at .

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Answer from: Quest
The answer is c because the law is facts
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Answer from: Quest
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When the federal funds rate equals the interest rate paid on excess reserves a. the demand curve fo...