One Problem with Using Discount Rate Changes to Influence Deposit

question 71

Multiple Choice

One problem with using discount rate changes to influence deposit creation or destruction is that

• A) small changes in the rate do not have much impact
• B) the discount rate changes are covert
• C) banks like to borrow from the Fed,and they will borrow even more after the changes
• D) the Fed must change the discount rate each time they meet
• E) banks do not have enough control over their demand deposits

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