If the discount rate is lowered,banks borrow
A)less from the Fed so reserves increase.
B)less from the Fed so reserves decrease.
C)more from the Fed so reserves increase.
D)more from the Fed so reserves decrease.

Question

Quizplus · Accepted Answer

If the discount rate is lowered, it becomes cheaper for banks to borrow money from the Fed. As a result, they will be more likely to borrow and increase their reserves.

If the Discount Rate Is Lowered,banks Borrow