A decrease in the discount rate: leads to an increase in the interbank rate charged by commercial banks. increases reserve holdings of the commercial banks. causes an increase in the federal funds rate. lowers the cost of borrowing from the Fed. decreases the money supply.

Survey Of Economics
10th Edition
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter19: Money Creation
Section: Chapter Questions
Problem 13SQ
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A decrease in the discount rate:

leads to an increase in the interbank rate charged by commercial banks.

increases reserve holdings of the commercial banks.

causes an increase in the federal funds rate.

lowers the cost of borrowing from the Fed.

decreases the money supply.

 

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