The Fed plans to raise the discount rate to 6%. This indicates that:
A) banks borrowing funds from the Fed will now pay 6% on the amount they borrow.
B) banks must hold funds in their vault or on deposit with the Fed equal to at least 6% of their deposits.
C) the Fed will pay 6% on any securities issued by the federal government during the current time period.
D) the amount of money in circulation can be no more than 6% greater than the amount of gold held in reserve by the government.
Correct Answer:
Verified
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