4 years ago

How does a reduction in the discount rate affect the money supply

1 answer:

galina1969 [7]4 years ago

7 0

Answer:

When the Fed lowers the discount rate, this increases excess reserves in commercial banks throughout the economy and expands the money supply. On the other hand, when the Fed raises the discount rate, this decreases excess reserves in commercial banks and contracts the money supply.

Explanation:

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