What policy tool of the Federal Reserve relies on bank borrowing to be effective?

Question

Quizplus · Accepted Answer

The policy tool of the Federal Reserve that relies on bank borrowing to be effective is the discount rate. The discount rate is the interest rate at which banks can borrow money overnight directly from the Federal Reserve. By increasing or decreasing the discount rate, the Federal Reserve can encourage or discourage banks from borrowing money, which in turn affects the money supply and overall economic activity.

What Policy Tool of the Federal Reserve Relies on Bank