By raising or lowering the ______,the Fed changes the cost of money for banks,which impacts the incentive to borrow reserves.
A) Reserve ratio
B) Discount rate
C) Money multiplier
D) Yield

Question

Quizplus · Accepted Answer

The discount rate is the interest rate at which banks can borrow money directly from the Federal Reserve. By raising or lowering the discount rate, the Fed changes the cost of this borrowing for banks. This, in turn, can impact the incentive for banks to borrow reserves and how they lend money to their customers.

By Raising or Lowering the ______,The Fed Changes the Cost