PRACTICE QUESTION FOR EXAM #2 - ECON 351 - FALL 2013 - …

Label this initial equilibrium point as point A. (5 points for correct and completely labeled diagram) c) (5 points) So you get this authority and decide, along with the FOMC, that the most appropriate rate to pay on excess reserves would be 20 basis points (0.20%). Given these new conditions, explain. what would happen reserve demand and why. ................
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