-Q1\: suppose finincal institutions,such as saving and loans,were required by law to make longe-term fixed interest rate mortgages,but,at the same time, were largely restricted ,in terms of thier capital sirces,to deposits that could be withdrawn on demand.Under these conditions,these financial institutions should perfer a "normal" yield curve to an iverted curve.
-Q2\: a decrease in reserve requirements should result in an
increase in the total level of member bank reserves.|||This is not the answer you asked for; but:
boy does it paint a picture of our financial world.
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