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Suppose that the demand for federal funds curve is such that

Paper help Economics Suppose that the demand for federal funds curve is such that

Economics

Suppose that the demand for federal funds curve is such that

Suppose that the demand for federal funds curve is such that th… Show more Please show all steps/work, Thanks! Suppose that the demand for federal funds curve is such that the quantity of funds demanded changes by $120 billion for each 1 precent change in federal funds interest rate. Also, assume that the current Federal funds rate is at the 3 precent rate that is targeted by the Fed. Now suppose that the Fed retargets the rate to 3.5 precent. Assuming no change in demand, will the Fed need to increase or decrease the supply of Federal funds? By how much will the quantity of Federal funds have to change for the equilibrium to occur at new target rate? • Show less

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