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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).

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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)

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  • 1. 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)