The Reason That the Fed Does Not Actively Use Discount

question 8

Multiple Choice

The reason that the Fed does not actively use discount rate policy to control the money supply is because the Fed

• A)acts when a majority of member banks agree on policy and the banks rarely agree.
• B)earns interest on discounting and cannot afford to lose the revenue.
• C)does not know how banks will respond to discount rate changes.
• D)has been directed by Congress to set the discount rate at a permanent level.

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Definitions:

Hersey-Blanchard's Situational Leadership

A model that proposes effective leadership requires adapting one's style to the maturity level of the followers.

Employee Readiness

The state of being prepared and equipped by employees to undertake specific tasks or embrace changes within an organization.

Ability, Willingness, Confidence

The trio of having the skills, desire, and self-assurance necessary for achieving a particular goal or task.

Hersey-Blanchard Situational Leadership

A leadership theory suggesting the need for leaders to adapt their leadership style based on the developmental level of the individuals they are leading.