Wednesday, 14 March 2018

How would the reserve demand curve move? Suppose the Federal Reserve did not pay interest on excess reserves. How would the reserve demand curve? A....

As
pohnpei and say, the demand curve is downward sloping as
the relationship between Price and Quantity of a good (in this case bank reserves) at various
prices is measured. When factors other than price (in this case interest rate charged for
borrowing) affect the demand curve, the affecting influence is seen in a
shift of the position of the curve on the graph. Favorable
influences shift the curve to the right, while unfavorable
influences shift it to the left. Since the withdrawal of interest
paid on reserves would be an unfavorable influence (from the point of view of the bankers), the
downward sloping demand curve would shift to the
left, as pohnpei said, but the demand would not be flat. 


http://www.netmba.com/econ/micro/demand/curve/


http://ecedweb.unomaha.edu/dem_sup/analysis.htm

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