A decision by the Fed to raise the discount rate (rate at which Fed lends to banks) will: a) increase output by raising the money supply and lowering the interest rate b) decrease output by lowering the money supply and raising interest rates c) decrease output by raising the money supply and raising interest rates d) increase output by lowering the money supply and raising interest rates

A decision by the Fed to raise the discount rate (rate at which Fed lends to banks) will: a) increase output by raising the money supply and lowering the interest rate b) decrease output by lowering the money supply and raising interest rates c) decrease output by raising the money supply and raising interest rates d) increase output by lowering the money supply and raising interest rates

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter15: Money Creation

Section: Chapter Questions

Problem 20SQ

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Which of the following actions by the Fed would cause interest rates to fall? A. Raising the discount rate B. Purchasing bonds from commercial bank C. Raising the reserve requirement D. None of the above
In what ways can the Fed be subject to external pressure? (Select all that apply) 1. The president can exercise control over the membership of the Board of Governors and appoint a new chairman every 4 years 2. The congress scrutinizes Fed's budgetary requests and can reduce the amount requested if the Fed has fallen out of favour 3. The congress can try put pressure on the Fed and amend the Fed's charter 4. The Fed is subject to influence from different investor groups because it has to rely on external source of funding
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