Two ways for banks to borrow reserves from the Federal Reserve are through:
A) the discount window and the Term Auction Facility.
B) open-market operations and excess reserve swaps.
C) decreasing the reserve-deposit ratio and decreasing the currency-deposit ratio.
D) fractional-reserve banking and financial intermediation.

Question

Quizplus · Accepted Answer

The discount window and the Term Auction Facility are the two primary ways for banks to borrow reserves from the Federal Reserve. The discount window is the lender of last resort facility that allows eligible banks and other depository institutions to borrow funds from the Federal Reserve at a discount rate. The Term Auction Facility is a program that allows depository institutions to bid for term funds through an auction process. Open-market operations and excess reserve swaps are tools that the Federal Reserve uses to inject or withdraw reserves into or from the banking system. Decreasing the reserve-deposit ratio and the currency-deposit ratio are not ways for banks to borrow reserves from the Federal Reserve but are factors that affect the money supply. Fractional-reserve banking and financial intermediation are systems for creating credit and liquidity but are not ways for banks to borrow reserves from the Federal Reserve.

Two Ways for Banks to Borrow Reserves from the Federal