If the Fed Raises the Discount Rate, What Will Be

question 186

Multiple Choice

If the Fed raises the discount rate, what will be the effect on the money supply?

• A)It will decrease the money supply.
• B)It will increase the money supply.
• C)No change in the money supply
• D)Not enough data to give an answer

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Definitions:

Indorser

A person who signs their name on a financial document, thereby transferring their rights in the document to another party.

Good Faith

Displaying truthfulness and genuineness without aiming to mislead or cheat.

Holder in Due Course

A legal term for an entity that has acquired a negotiable instrument in good faith and for value, thus having certain protections against defenses and claims that could be made against the instrument.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money to the bearer or a named party, either on demand or at a set time.