Which of the following observations concerning the Fed's discount window is true?
A)The facility is provided to meet DIs' permanent liquidity needs.
B)Four lending programs are offered through the Fed's discount window.
C)Primary credit is available to sound depository institutions on a very short-term basis.
D)Secondary credit is available only to depository institutions that are eligible for primary credit.

Question

Quizplus · Accepted Answer

Primary credit is available to sound depository institutions on a very short-term basis. The Fed's discount window provides lending to depository institutions to meet short-term liquidity needs. There are three lending programs offered through the discount window: primary credit, secondary credit, and seasonal credit. Primary credit is available to sound depository institutions on a very short-term basis (usually overnight) and is the most frequently used lending program. Secondary credit is available to depository institutions that are not eligible for primary credit, and seasonal credit is offered to smaller, seasonal depository institutions.

Which of the Following Observations Concerning the Fed's Discount Window