When the Fed Increases the Discount Rate, Banks

question 33

Multiple Choice

When the Fed increases the discount rate, banks

• A) must purchase more government securities.
• B) must pay a higher rate when they borrow from the Fed.
• C) will lower the rate they charge to borrowers.
• D) must hold a greater amount of funds in reserve against deposits.

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Definitions:

Error of Estimation

The discrepancy between a parameter's estimated value and its true value in the population.

Error of Estimation

This refers to the margin of error in statistical estimates, representing the degree of uncertainty around the estimated value.

Estimator

A rule or formula that provides a means to calculate an estimate of a given parameter from sample data.

Parameter

A value that summarizes a characteristic of a population or a statistical model.