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Fed Funds Market

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Explain why the Fed must normally add reserves to the banking system via open market operations on most days in order to maintain its interest rate target in the Fed Funds market.

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Fed Funds Market is assessed in 200 words.

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Fed Funds Market

Every bank must hold enough reserves at the Fed to cover its depositors' checks, and enough vault cash to meet the demand for withdrawals by depositors. These reserves are normally met by an active interbank market in which banks lend or borrow reserves among themselves. The interest rate on ...

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