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:

Axle Shim Wedges

Thin pieces of material used to adjust the angle or position of an axle, improving alignment.

Leaf Spring Rear Suspension

A type of vehicle suspension that uses long, narrow plates of steel, known as leaf springs, positioned under the rear part of the vehicle to provide support and absorb shocks.

Twin Zerks

Twin Zerks refer to a pair of grease fittings used in mechanical systems for lubrication purposes, allowing for easy maintenance and extended component life.

Trunnion Seals

Seals used in the trunnion assembly of a machine, such as a crane or a mill, to prevent leakage of fluids and protect against contamination.