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Biology, 08.11.2019 21:31 watervliet2586

Why might the procyclical behavior of interest rates (rising during business cycle expansions and falling during recessions) lead to procyclical movements in the money supply? (assume the fed does not change the discount rate.) a. the excess reserves ratio e falls with rising interest rates and the money supply rises when e falls. b. the excess reserves ratio e rises with rising interest rates and the money supply rises when e rises. c. discount loan borrowing is positively related to interest rates and the money supply is positively related to the level of discount loans from the fed. d. discount loan borrowing is negatively related to interest rates and the money supply is negatively related to the level of discount loans from the fed. e. both a & c are correct. f. both b & d are correct.

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