Discount policy
A)is the most frequently used of the Fed's monetary policy tools.
B)is the oldest of the Fed's monetary policy tools.
C)may be implemented more rapidly than open market operations.
D)affects the monetary base, but does not affect interest rates.

Question

Quizplus · Accepted Answer

The discount policy, which involves the rate at which commercial banks can borrow from the Federal Reserve, is indeed the oldest of the Fed's monetary policy tools. It was established as part of the Federal Reserve's original mandate to provide liquidity to banks in times of financial distress.

Discount Policy