Question 10 Lowering the discount rate has the effect of O turning required rese

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Question 10 Lowering the discount rate has the effect of O turning required reserves into excess reserves. O turning excess reserves into required reserves. O making it less expensive for commercial banks to borrow from the Fed. O making it more expensive for commercial banks to borrow from the Ferd. Question 11 If the Federal Reserve increases the interest paid on excess reserves that b anks hold at the Federal Reserve Banks, then the change in this tool of monetary policy has the effect of O increasing bank lending. O decreasing bank lending. increasing the reserve ratio. O decreasing the reserve ratio.

Explanation / Answer

Q10
answer
Option
making it less expensive for commercial banks to borrow from the Fed
the discount rate is a rate charged by Fed on borrowed money by commercial banks if it decreases then the cost decreases.

Q11
Answer
Option
increasing bank lending
the decreased rate of the excess reserve will decrease the excess reserve kept at Fed the bank starts lending it.

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