Author Question: When the Fed lowers the discount rate, it: a. lowers the cost of borrowing from the Fed, ... (Read 18 times)

biggirl4568 · **on:** Jun 30, 2018

When the Fed lowers the discount rate, it:
a. lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public.
b. raises the cost of borrowing from the Fed, discouraging banks from making loans to the general public.
c. increases the amount of excess reserves that banks hold, encouraging them to make loans to the general public.
d. increases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.
e. decreases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.

Question 2

The rate of interest charged by the Federal Reserve to member banks for reserves borrowed from the Fed is known as the:
a. federal funds rate.
b. discount rate.
c. repurchase rate.
d. Q-ceiling rate.