If the Fed Raises the Discount Rate, What Happens to Reserves

question 83

Multiple Choice

If the Fed raises the discount rate, what happens to reserves and the money supply?

• A) Reserves increase and the money supply decreases.
• B) Both increase.
• C) Reserves decrease and the money supply increases.
• D) Both decrease.

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Definitions:

Cultural-Transmission Theory

A concept in sociology that suggests culture and societal norms are learned and passed down from one generation to the next through socialization.

Appeal to Higher Loyalties

Appeal to higher loyalties is a term used in sociology to describe a situation where an individual justifies breaking societal norms or laws by claiming allegiance to a more significant cause or authority.

Condemning Judgments

Harsh criticisms or assessments that express strong disapproval of someone or something.

Justifications

Reasons or arguments presented in support of an action, belief, or theory.