By raising the discount rate, the Federal Reserve ________ banks from borrowing more reserves.

Name: By raising the discount rate, the Federal Reserve ________ banks from borrowing more reserves.
Brand: Quizplus
Rating: 4.9 (56 reviews)

Question

Quizplus · Accepted Answer

Raising the discount rate is a contractionary monetary policy tool used by the Federal Reserve to reduce the money supply and raise interest rates. By doing so, the Fed discourages banks from borrowing more reserves and instead encourages them to lend less and hold more reserves.

By Raising the Discount Rate, the Federal Reserve ________ Banks