When the Fed Increases the Discount Rate, Banks

question 33

Multiple Choice

When the Fed increases the discount rate, banks

• A) must purchase more government securities.
• B) must pay a higher rate when they borrow from the Fed.
• C) will lower the rate they charge to borrowers.
• D) must hold a greater amount of funds in reserve against deposits.

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Definitions:

Implied in Law

describes obligations or rights that are not explicitly stated but are inferred by legal principles or statutes to ensure fairness and justice.

Unjust Enrichment

A legal principle that occurs when one person is unfairly enriched at the expense of another, and the law demands restitution to the aggrieved party.

Executory Contract

A contract under which both parties have not yet fully performed their contractual obligations.

Genuine Contracts

Contracts that are legally binding and enforceable, characterized by mutual assent, consideration, capacity, and legality.