the discount rate and federal nt Attempts: Keep the Highest: /2 10. The discount

Question

the discount rate and federal nt Attempts: Keep the Highest: /2 10. The discount rate and the federal funds rate The discount rate is the interest rate on loans that the Federal Reserve makes to banks. Banks occasionally borrow from the Federal Reserve when they find themselves short on reserves. A lower discount rate thereby banks' incentives to borrow reserves from the Federal Reserve, supply toY The federal funds rate is the interest rate that banks charge one another for short-term (typically overmight) loans. When the Federal Reserve uses banks' need to borrow from each buy the other ,and the federal funds rate-

Explanation / Answer

we know that federal reserve's discount rate is the interest rate that the US central bank charges its member banks to borrow from its discount window to maintain the reserve requirements.

so accordingly ist para answer, a - raises/increases

                                               b - increasing

                                               c - increases

Federal interest rate which is also known as federal fund rate is the interest rate that banks charge each other for taking out overnight loans to meet the reserve requirements.

reserve requirements are determined by the federal bank that tells the depository institution that how much money they have to keep in their reserve.

so accordingly answer is - a - increases

                                    b - will decline

                                    c - decreases .

we know that discount rate, fund rates, open market operations are the tools of fed monetary policy which used to influence the interest rate and money supply.

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