Which of the following is an approach used by the Fed to lessen the likelihood of inflation?
A)Lower the reserve requirement for banks so they can loan out more money.
B)Raise the discount rate charged to banks that borrow funds from the Fed.
C)Buy bonds on the open market to increase the amount of money banks have to lend.
D)Lower the federal funds rate charged to banks who want to borrow from other banks.

Question

Quizplus · Accepted Answer

Raising the discount rate makes it more expensive for banks to borrow money from the Federal Reserve, which can reduce the money supply and help prevent inflation.

Which of the Following Is an Approach Used by the Fed