Which of the following statements concerning the discount rate is FALSE?
A) A decrease in the discount rate is an appropriate easy money policy.
B) The Federal Reserve must grant all loan requests under discount policy.
C) Discount rate changes are announced publicly and indicate the direction of monetary policy.
D) The discount rate is the interest rate that a Federal Reserve Bank charges a financial depository institution for borrowing reserves.

Question

Quizplus · Accepted Answer

The Federal Reserve does not have to grant all loan requests under discount policy. The decision to grant loans is at the discretion of the Federal Reserve, and not all requests for borrowing through the discount window are automatically approved.

Which of the Following Statements Concerning the Discount Rate Is