Final answer:
The diagram shows the non-borrowed and borrowed reserves. Eliminating reserve requirements would not have a direct impact on the federal funds rate, discount rate, non-borrowed reserves, or total reserves.
Step-by-step explanation:
a) Diagram:
To accurately reflect the information provided, draw a diagram with two layers. The first layer includes the non-borrowed reserves of $26, represented with an arrow pointing towards reserves. The arrow should be labeled with the value $26. The second layer includes the borrowed reserves of $0, represented with an arrow pointing towards reserves. The arrow should be labeled with the value $0.
b) Effect of eliminating reserve requirements:
If reserve requirements were eliminated, the diagram would change to show that there are no required reserves. The arrow representing non-borrowed reserves would remain the same, while the arrow representing borrowed reserves would be removed.
c) Impact of reserve requirement elimination:
i) The federal funds rate would likely stay the same. Reserve requirements do not directly affect the federal funds rate.
ii) The discount rate would likely stay the same. Changes in reserve requirements do not directly affect the discount rate.
iii) Non-borrowed reserves would likely stay the same because the elimination of reserve requirements would not directly impact them.
iv) Total reserves would likely stay the same because the elimination of reserve requirements would not directly impact them.