Which of the following statements is NOT true?
A)Each Federal Reserve bank maintains its own discount window.
B)Before 1980, the Fed rarely made loans to banks which were not members of the Federal Reserve System.
C)Since 1980, all depository institutions have had access to the discount window.
D)An increase in the volume of discount loans reduces the monetary base.

Question

Quizplus · Accepted Answer

An increase in the volume of discount loans actually increases the monetary base, not reduces it. When the Federal Reserve lends to banks through the discount window, it increases the reserves of the banking system, thereby increasing the monetary base.

Which of the Following Statements Is NOT True