Increases in the discount rate tend to tighten the money supply by
A) making it more expensive for member banks to augment their reserves by borrowing from the Fed.
B) forcing member banks to recall loans.
C) inducing banks to sell government securities.
D) reducing the amount of demand deposits that a given amount of reserves can legally support.
E) increasing the interest rate banks are legally allowed to pay depositors.
Correct Answer:
Verified
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