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Explain Why the Fed Making More Discount Loans to Banks

question 28

Essay

Explain why the Fed making more discount loans to banks, or an open market purchase, or an increase in foreign exchange reserves all have the same effect on its balance sheet. What is that effect on the monetary base?


Definitions:

NADPH

Nicotinamide adenine dinucleotide phosphate, a coenzyme involved in cellular processes, mainly anabolism and as a reducing agent in anabolic reactions.

Phosphate Group

A chemical group consisting of phosphorus bonded to four oxygen atoms, important in energy transfer.

Photorespiration

A process in plant metabolism where the enzyme RuBisCO oxygenates RuBP, wasting energy and reducing photosynthetic efficiency under certain conditions.

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