Increasing the discount rate increases the money supply and decreasing the discount rate decreases the money supply.

Name: Increasing the discount rate increases the money supply and decreasing the discount rate decreases the money supply.
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Question

Quizplus · Accepted Answer

Increasing the discount rate makes borrowing more expensive for banks, which typically reduces the money supply. Conversely, decreasing the discount rate makes borrowing cheaper for banks, which can increase the money supply.

Increasing the Discount Rate Increases the Money Supply and Decreasing