A change in the discount rate is likely to occur
A) after a change in the Treasury bill rate.
B) after a change in the Treasury bond rate.
C) before a change in the federal funds rate.
D) before a change in the inflation rate.

Question

Quizplus · Accepted Answer

The discount rate is the interest rate at which banks and other depository institutions can borrow money from the Federal Reserve's discount window. It is typically set higher than other short-term rates to encourage borrowing only in emergency situations. Therefore, a change in the Treasury bill rate can affect the demand for loans from the discount window, which can lead to a change in the discount rate.

A Change in the Discount Rate Is Likely to Occur