Other things the same,if the Fed raises the discount rate,then banks choose to borrow
A) more from the Fed so reserves increase.
B) more from the Fed so reserves decrease.
C) less from the Fed so reserves increase.
D) less from the Fed so reserves decrease.

Question

Quizplus · Accepted Answer

When the Fed raises the discount rate, it becomes more expensive for banks to borrow from the Fed, so they will choose to borrow less. Therefore, the banks' reserves will decrease because they are not borrowing as much from the Fed.

Other Things the Same,if the Fed Raises the Discount Rate,then