If the discount rate is lowered,banks choose to borrow
A) less from the Fed so reserves increase.
B) less from the Fed so reserves decrease.
C) more from the Fed so reserves increase.
D) more from the Fed so reserves decrease.

Question

Quizplus · Accepted Answer

When the discount rate is lowered, banks find it cheaper to borrow from the Fed, therefore they choose to borrow more, thus increasing their reserves.

If the Discount Rate Is Lowered,banks Choose to Borrow