During inflationary periods,the Federal Reserve should lower the discount rate so that member banks may more easily obtain needed reserves to enable them to increase their loans.

Question

Quizplus · Accepted Answer

During inflationary periods, the Federal Reserve is more likely to increase the discount rate to make borrowing more expensive, which can help reduce the money supply and thus help control inflation. Lowering the discount rate would encourage more borrowing and potentially exacerbate inflation.

During Inflationary Periods,the Federal Reserve Should Lower the Discount Rate