Macroeconomics + Economy 2009 Update 18th Edition by Campbell McConnell, Sean Masaki Flynn,Stanley Brue

Exercise 4

Suppose a bank discovers that its reserves will temporarily fall slightly short of those legally required. How might it remedy this situation through the Federal funds market Now assume the bank finds that its reserves will be substantially and permanently deficient. What remedy is available to this bank (Hint: Recall your answer to question 4.)