An increase in the discount rate by the Federal Reserve causes ...

[cnetterville]

An increase in the discount rate by the Federal Reserve causes the money stock to expand.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 2

A lower discount rate discourages banks from borrowing reserves and making loans. Therefore, if the Fed wants to expand the money supply, it raises the discount rate.
 a. True
  b. False
  Indicate whether the statement is true or false

[kthug]

Answer to Question 1

False

Answer to Question 2

False