The Fed Plans to Raise the Discount Rate to 7

question 256

Multiple Choice

The Fed plans to raise the discount rate to 7%. This indicates that

• A) banks borrowing funds from the Fed will now pay 7% on the amount they borrow.
• B) banks must hold funds in their vault or on deposit with the Fed equal to at least 7% of their deposits.
• C) the Fed will pay 7% on any securities issued by the federal government during the current time period.
• D) the amount of money in circulation can be no more than 7% greater than the amount of gold held in reserve by the government.

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