Which of the Following Statements BEST Describes Why an Increase

question 76

Multiple Choice

Which of the following statements BEST describes why an increase in the discount rate often results in a decrease in the money supply?

• A) An increase in the discount rate will lower the overall values of loans from the Federal Reserve Banks to individual banks.
• B) An increase in the discount rate will lower the overall values of loans from individual banks to other financial institutions.
• C) An increase in the discount rate will lower the overall number of banks issuing loans to individuals.
• D) An increase in the discount rate will lower the overall number of loans from the Federal Reserve Banks to individual banks.
• E) An increase in the discount rate will lower the overall number of loans from the Federal Reserve Banks to individuals.

---

Definitions:

Monopolies

Market situations in which a single supplier dominates the supply of a good or service, with no close substitutes.

Demand Curve

An illustrated chart depicting the correlation between a product's price and the amount of it consumers want to buy at that price level.

Marginal Cost

The spending necessary to produce an extra unit of a product or service.

Intellectual Property

Legal rights that result from intellectual activity in the industrial, scientific, literary, and artistic fields.