Question

select the supply of reserves, the upper end of the demand for reserves, lower end of the demand for reserves, or both the upper and lower end of the demand for reserves. then selected the direction of the shift. the federal reserve increases discount rate.

Explanation:

The upper end of the demand for reserves (the horizontal segment at the discount rate) shifts upward when the Federal Reserve raises the discount rate. This is because the discount rate acts as the upper bound for the policy rate, so an increase in it raises this upper limit of banks' reserve demand (since borrowing from the Fed is now more expensive, the rate at which banks are willing to borrow reserves from the Fed is higher).

Answer:

Select the upper end of the Demand for Reserves, and shift it upward.