The Higher the Discount Rate, the Greater the Incentive for Banks

question 96

True/False

The higher the discount rate, the greater the incentive for banks to hold excess reserves.

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Definitions:

Interest Rates

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal, or the rate at which interest is paid by bond issuers on the bond’s face value.

Military Bases

Facilities established by the military for housing troops, storing equipment, and training personnel, often strategically located.

Java Jacket

A protective sleeve designed to insulate a person's hand from hot beverages in disposable coffee cups.

Innovator

An individual or organization that introduces new ideas, products, or methods, driving progress and often leading to significant changes in industries or markets.