The most important advantage of discount policy is that the Fed can use it to
A)precisely control the monetary base.
B)perform its role as lender of last resort.
C)control the money supply.
D)punish banks that have deficient reserves.

Question

Quizplus · Accepted Answer

The most important advantage of a discount policy is that it allows the Federal Reserve (Fed) to perform its role as a lender of last resort. This means the Fed can provide liquidity to banks in times of financial distress, ensuring the stability of the financial system.

The Most Important Advantage of Discount Policy Is That the Fed