When the Fed provides more reserves toprovides more reserves
When the Fed
provides more reserves toprovides more reserves to
the banking system, the money banks have to lend to each other
falls
rises
,
and the federal fund rate
rises
falls
.
Solution
When the Fed provides more reserves to the banking system, the money banks have to lend to each other rises and the federal fund rate falls. (due to increase in money supply)
