If the Fed Increases the Discount Rate, It Is Pursuing

question 80

Multiple Choice

If the Fed increases the discount rate, it is pursuing

• A) a contractionary policy because it will be more costly for banks to borrow funds and this puts upward pressure on interest rates in the economy.
• B) a contractionary policy because it reduces banks' profit margins by raising the cost of borrowing and lowering the return on lending.
• C) an expansionary policy because it raises the cost of holding excess reserves in the banking system.
• D) an expansionary policy because it increases bank profits by putting upward pressure on the interest rates that banks can charge on its loans.

---

Definitions:

Birth Order

The chronological order of sibling births in a family, which is often theorized to influence personality development and behaviors of individuals.

Morningness-Eveningness

A characteristic of individuals that refers to their preference for mornings or evenings in terms of peak alertness and activity.

Confounding Variables

In a correlational study, an outside variable related to the primary variables; also known as third variables.

Gene-Environment Interaction

The complex interplay between genetic predispositions and environmental influences on an individual's traits and behaviors.