When the Fed Reduces the Discount Rate, This Sends a Signal

question 171

Multiple Choice

When the Fed reduces the discount rate, this sends a signal to banks that the Fed wants:

• A)the money supply to expand.
• B)the money supply to contract.
• C)the federal funds rate to increase.
• D)to reduce the reserve requirement.

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Definitions:

Central Processing Unit

The primary component of a computer that performs most of the processing inside a computer.

Main Memory

The principal storage in a computer in which data and programs are temporarily stored for quick access by the processor.

Secondary Storage

A non-volatile storage medium used for keeping data permanently, as opposed to the volatile primary storage or main memory.

Input Device

A hardware component used to enter data or instructions into a computer system.