Lowering the Discount Rate Is

question 60

Multiple Choice

Lowering the discount rate is

• A) a contractionary policy stance because the cost of borrowing funds falls, thereby encouraging consumption and investment spending.
• B) a contractionary policy because it reduces banks' profit margins by lowering the return on lending.
• C) an expansionary policy stance because consumers and businesses can now borrow funds directly from the Fed at a lower cost, thereby encouraging private spending.
• D) an expansionary policy stance because it will be less costly for banks to borrow funds and this puts downward pressure on interest rates in the economy.

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Definitions:

Pregnancy

The condition of having a developing embryo or fetus in the uterus, marked by various physical and hormonal changes in the body.

Menstrual Cycle

The more-or-less monthly process during which the uterus is readied for implantation of a fertilized ovum. Also known as uterine cycle.

Ovulation

The release of an oocyte from the ovary during the ovarian cycle.

Intercourse

The act of sexual contact between individuals, often referring specifically to penile-vaginal penetration.