If There Is No Discount Lending, the Fed Must Change

question 45

Multiple Choice

If there is no discount lending, the Fed must change the _____ to change the equilibrium federal funds rate.

• A) discount rate
• B) reserve requirement
• C) both of the above
• D) neither of the above

---

Definitions:

National Saving

The total amount of savings in a country, equal to the sum of private and public savings, representing the portion of national income not used for consumption or government spending.

Consumption

Consumption involves the use of goods and services by households, constituting one of the main components of aggregate demand in an economy.

Government Purchases

Spending by the government on goods and services that are included in the calculation of the country's gross domestic product.

Demand Curve

An illustration that depicts the inverse relationship between the price of an item and the quantity demanded by consumers within a certain period.