Solved

If the Fed Increases the Discount Rate

Question 12

Multiple Choice

If the Fed increases the discount rate,


A) it will then increase the required reserve ratio as well.
B) it will then decrease the required reserve ratio to offset any possible contractionary effect.
C) it will be easier for banks to secure the reserves needed to support a higher volume of commercial loans.
D) banks will face a higher cost of borrowing and will pass some of this cost onto customers in terms of higher interest rates.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents