Please see below. I'm not sure on this one. Which is a reason for why private banks tend not to use the discount window?The discount rate is typically lower than the federal funds rate.The discount rate is typically higher than the federal funds rate.Banks always have plenty of excess reserves, so they don't need to borrow.The discount window can cause a liquidity trap.Quantitative easing ensures deflation.

The federal rate is the rate at which commercial banks borrow from each other whereas a discount…

Answered: Which is a reason for why private banks…

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Which is a reason for why private banks tend not to use the discount window?

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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Please see below. I'm not sure on this one.

Which is a reason for why private banks tend not to use the discount window?
The discount rate is typically lower than the federal funds rate.
The discount rate is typically higher than the federal funds rate.
Banks always have plenty of excess reserves, so they don't need to borrow.
The discount window can cause a liquidity trap.
Quantitative easing ensures deflation.

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