Discounting refers to the Fed's practice of

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Discounting refers to the process of the Federal Reserve lending reserves to private banks. The discount rate is the interest rate charged by the Federal Reserve when it lends funds to banks. This is one of the ways the Fed can influence the money supply and interest rates in the economy. A lower discount rate makes it cheaper for banks to borrow funds and increases the money supply, whereas a higher discount rate makes it more expensive to borrow funds and decreases the money supply.

Discounting Refers to the Fed's Practice of