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Explain the Difference Between the Discount Rate and the Federal

question 34

Essay

Explain the difference between the discount rate and the federal funds rate.If the Fed wants to lower one of these rates,which one can the Fed change by issuing an order? Describe in detail how the Fed helps to lower the other rate.


Definitions:

Mental Set

A cognitive framework consisting of a person's usual way of approaching and solving problems, often leading to a fixation on previous solutions.

Inhibit

To hold back, hinder, or restrain an action, process, or behavior.

Creativity

The ability to produce new and valuable ideas.

Availability Heuristic

A cognitive shortcut that relies on immediate examples that come to a person’s mind when evaluating a specific topic, concept, method or decision.

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