The fed has created $3 trillion of bank reserves. draw a curve that shows the supply of bank reserves. label it rs. the current federal funds rate is 0.2 percent. suppose that when the federal funds rate is greater than 0.2 percent, a fall in the federal funds rate increases the quantity of reserves demanded, but a further open market purchase of securities fails to change the federal funds rate. draw the demand curve for bank reserves that illustrates this fact. label it rd. > > > when using the multi-point drawing tool, press escape to release the drawing tool. draw a point to show the current federal funds rate and the equilibrium quantity of reserves.

4. understanding different policy options to correct for negative externalities carbon dioxide emissions have been linked to global warming. the following table lists some possible public policies aimed at reducing the amount of carbon dioxide in the air. for each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax. public policy command-and-control policy tradable permit system corrective subsidy corrective tax the government charges factories $110 for every ton of carbon dioxide they emit. the government orders every factory to adopt a new technology, which reduces carbon-dioxide emissions into the atmosphere. trees take carbon dioxide out of the air and convert it to oxygen, so the government funds a tree-planting initiative by offering $110 to any citizen who plants a tree. the government limits total carbon-dioxide emissions by all factories to 180,000 tons per month. each individual factory is given the right to emit 140 tons of carbon dioxide, and factories may buy and sell these rights in a marketplace.