Why is the demand function for federal funds flat (horizontal) at the level of interest rate on reserves (IOR)? a. Because the Fed would refuse to lend to banks at any federal funds rate below IOR. b. Because the Fed would refuse to lend to banks at any federal funds rate above IOR. Because banks would refuse to lend to other banks at any federal funds rate below IOR. d. Because banks would want to lend all of their reserves to other banks if the fed funds rate equals IOR. e. Because if the fed funds rate equals IOR, the Fed will supply as much reserves to the banks as they want. Question 4 What is the definition of demand for federal funds? a. It is the amount of federal funds banks want to borrow from other banks. b. It is the amount of federal funds banks want to borrow from the Fed. c. It is the amount of federal funds banks want to hold at their Fed accounts. d. It is the amount of federal funds banks want to borrow from the Public. e. None of the above.