When the Fed increases the discount rate, banks are likely to increase their lending, and the money supply increases.

Name: When the Fed increases the discount rate, banks are likely to increase their lending, and the money supply increases.
Brand: Quizplus
Rating: 4.7 (47 reviews)

Question

Quizplus · Accepted Answer

When the Fed increases the discount rate, it becomes more expensive for banks to borrow money from the Federal Reserve. As a result, banks may decrease lending and the money supply may decrease.

When the Fed Increases the Discount Rate, Banks Are Likely