Which of the following statements is incorrect?
A) When market rates are changing, the discount rate adjusts immediately.
B) Money market interest rates tend to respond quickly to Federal Reserve open market operations.
C) The discount rate may be above or below other money market interest rates at a given point in time.
D) All of the above are true.

Question

Quizplus · Accepted Answer

The discount rate is set by the Federal Reserve and is not immediately adjusted when market rates are changing. Rather, the Federal Reserve may adjust the discount rate in response to changing market rates.

Which of the Following Statements Is Incorrect