a. The discount rate is the: interest rate at which banks can borrow reserves fr

ID: 1223669 • Letter: A

Question

a. The discount rate is the:

interest rate at which banks can borrow reserves from the Federal Reserve.

interest rate at which banks can borrow reserves from other banks.

lowest interest rate that banks can charge for lending reserves to other banks or financial institutions.

lowest interest rate that banks can charge for loans to their most creditworthy customers.

b. If the Fed were to decrease the discount rate, banks will borrow:

fewer reserves, causing an increase in lending and the money supply.

more reserves, causing a decrease in lending and the money supply.

fewer reserves, causing a decrease in lending and the money supply.

more reserves, causing an increase in lending and the money supply.

a. Interest rate at which banks can borrow reserves from the Federal Reserve through Fed Primary Window.

b. More reserves, causing an increase in lending and the money supply.

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