Lowering the Discount Rate Is a Way to Expand the Money

question 146

Multiple Choice

Lowering the discount rate is a way to expand the money supply because

• A)it encourages banks to borrow from the Fed so they can more easily accommodate their customers' needs for loans
• B)it encourages business customers to borrow directly from the Fed
• C)a lower discount rate reduces the amount of reserves banks are required to keep
• D)a lower discount rate automatically reduces excess reserves
• E)it encourages banks to sell U.S.government securities and increase their cash reserves

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