Author Question: When the Fed raises the discount rate, it: a. lowers the cost of borrowing from the Fed, ... (Read 53 times)

Pea0909berry · **on:** Jun 30, 2018

When the Fed raises 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 interest rate which the Fed charges banks that borrow reserves from it is the:
a. federal funds rate.
b. discount rate.
c. reserved rate.
d. investment rate.
e. check rate