By raising and lowering the discount rate,the Fed changes the

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By raising the discount rate, the Fed makes it more expensive for banks to borrow reserves from the Fed. As a result, banks are less likely to borrow and more likely to rely on their existing reserves, which decreases the money supply. Conversely, by lowering the discount rate, the Fed makes it cheaper for banks to borrow reserves and encourages banks to borrow more, which increases the money supply. Therefore, changing the discount rate can affect the incentive for banks to borrow reserves.

By Raising and Lowering the Discount Rate,the Fed Changes the