The interest rate in the federal funds market: a. is determined ...

[karlynnae]

The interest rate in the federal funds market:
 a. is determined by the imposition of price controls imposed by the Fed.
  b. rises when the quantity of funds demanded by banks seeking additional reserves exceeds the quantity supplied by banks with excess reserves.
  c. will fall if the Fed sells bonds and, thereby, reduces the reserves available to banks.
  d. is an interest rate that is largely unaffected by the policies of the Fed.

Question 2

The federal funds market is the market where:
 a. the federal government raises funds to cover its budget deficit.
  b. the Federal Reserve System makes loans to commercial banks.
  c. commercial banks with excess reserves make loans to commercial banks seeking reserves.
  d. commercial banks make loans to the Federal Reserve.

[ankilker]

Answer to Question 1

b

Answer to Question 2

c

[karlynnae]

Gracias!

[yeungji]

Excellent