An Important Characteristic of the Discount Rate Is That It

question 8

Multiple Choice

An important characteristic of the discount rate is that it

• A) has a powerful effect on the money supply.
• B) has a direct impact on bank reserves without changing the money supply.
• C) can be changed frequently and substantially.
• D) structurally alters bank credit creation.
• E) has no effect on financial markets.

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Definitions:

Administrative Law Judge

An official who presides over government agency hearings and makes decisions on disputes involving administrative law.

U.S. Supreme Court

The U.S. Supreme Court is the highest court in the United States, holding ultimate appellate jurisdiction over all federal and state court cases that involve a point of federal law.

Fourth Branch of Government

Informally refers to groups that influence the three branches of government defined in the U.S. Constitution (executive, legislative, and judicial) such as the media, the people, or administrative agencies.

Formal Rule Making

A procedure in administrative law where agencies establish new regulations through a process that involves publication of proposed rules, public commenting, and final rule issuance.