Question

Which economic action would be most influenced by a change to the discount rate

Answer 1

Answer:  A bank deciding whether to borrow money from the

government

Explanation:

The discount rate is the interest rate at which the Federal Reserve charges commercial banks and other financial institutions for loans it advances to them. Through the Federal Reserve, the government issues credit facilities to banks to cater to immediate cash flow requirements. For example, if a bank can not meet the reserve requirement for the day, it can borrow from banks with excess requirements. If it can't find another bank to borrow from, it approaches the Fed.

The interest rate that the Fed charge is the discount rate. It is usually higher than the inter-bank rates. If the discount rate is reduced, commercial banks may consider borrowing from the government through the Fed