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Scenario: The following gure shows the federal funds market. Assume that the market of reserves is in equilibrium at $500 billion in reserves and a 3...

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Scenario: The following figure shows the federal funds market. Assume that the market of reserves is in equilibrium at
$500 billion in reserves and a 3 percent federal funds rate. Federal funds
rate (%) 0 100 500 900 Quantity of reserves
(in billions of dollars) 33) Refer to the scenario above. Suppose the Fed wants to lower the federal funds rate by 2 percentage points, To do this,
the Fed could A) sell $400 billion worth of bonds to private banks.
B) buy $400 billion worth of bonds from private banks.
C) sell $100 billion worth of bonds to private banks.
D) buy $900 billion worth of bonds fiom private banks.

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