The Discount Window or Discount Rate Gives Banks a Buffer

question 57

True/False

The discount window or discount rate gives banks a buffer in the reserves market against unexpected day-to-day fluctuations in the demand and supply of reserves.

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Definitions:

FICA-Medicare

A federal payroll tax that funds Medicare, the U.S. health insurance program for individuals aged 65 and over or who meet other specific criteria.

Gross Wages

Gross Wages refer to the total amount of compensation earned by an employee before any deductions or taxes are taken out.

Net Wages

The amount of an employee's earnings after all deductions, such as taxes and retirement contributions, have been subtracted.

Allowance or Exemption

A reduction in the amount of income that is subject to tax, or a legal deduction from reported income to reduce taxable income.