... (bond demand), decrease the demand for loanable funds (bond supply) and increase the interest rate www2.hawaii.edu/~bonham/340 /exams_ 340.html 28/57 03/12/2013 Econ 340: Money, Banking and Financial ... cycle and will resume substantial growth over the next several years a (15 points) Using a supply and demand for fed funds (supply and demand for very short term bonds) model, illustrate and explain ... www2.hawaii.edu/~bonham/340 /exams_ 340.html 10/57 03/12/2013 Econ 340: Money, Banking and Financial aspects of the U.S financial system can be explained in terms of transactions costs and asymmetric information...