Reserve demand becomes horizontal at the IOER rate because:
A. the reserve supply is always set by the Fed so that the federal funds rate is greater than the IOER rate.
B. banks will not make loans at less than the IOER rate.
C. banks must earn more than the IOER rate to lend.
D. the IOER rate is the upper bound of the target federal funds rate
Answer: B
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