When the Fed lowers the discount rate, it
a. lowers the cost of borrowing from the Fed, allowing banks to make more loans
b. raises the cost of borrowing from the Fed, disallowing them from making the same quantity of loans
c. increases the amount of excess reserves that banks hold, allowing them to make more loans
d. increases the amount of excess reserves that banks hold, disallowing them from making the same quantity of loans
e. decreases the amount of excess reserves that banks hold, disallowing them from making the same quantity of loans
A
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According to the permanent income hypothesis, a person's consumption increases only when
A) the person's average lifetime income increases. B) the person saves more. C) the person's current income increases. D) the person's income increases unexpectedly.
Suppose a babysitter demands payment in full before the parents go out for the night. Using the economic way of thinking, the babysitter is clearly
A) exploiting the parents. B) exploiting the children. C) selling short. D) in it only for the money.