. If banks perform a switch from deposits to currency, what happens to the federal funds rate? Provide a supply and demand graphical analysis of the market for reserves and

. If banks perform a switch from deposits to currency, what happens to the federal funds rate?
Provide a supply and demand graphical analysis of the market for reserves and explain your answer. (15 points)
NOTE: Figures are needed! . State whether the following statement is true or false AND explain why: "An increase in the
interest rate paid on excess reserves will always cause an increase in the federal reserve funds rate. " (15 points)
NOTE: Figures are needed! . Suppose households convert their currency holdings into deposits at banks. a) would be the impact on the federal funds rate? (5 points) b) could the FED do to bring the federal funds rate back to its initial level? (5 points)
NOTE: Figures are needed! . does the Taylor rule imply that policymakers should do to the fed funds rate under
the following scenarios? a) Unemployment rises due to a recession. (5 points) b) An oil price shock causes inflation to increase by 1% and output to decrease by 1%. (5
points)

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