Question

What happens when a country's central bank raises the discount rate for
banks?
A. Banks must pay more for short-term loans from the government.
B. Banks must pay the government interest on all cash they keep on
hand.
C. Banks are forced to set aside more of their money instead of
lending it.
O D. Banks are required to sell all their treasury securities on the open
market.

Answer 1

Answer:

C. Banks are forced to set aside more of their money instead of  lending it.

Explanation:

The Fed also estimates the discount rate, the interest rate at which banks can obtain straight from the central bank. If the Fed heightens interest charges, it improves the expense of borrowing, addressing both credit and investment more costly. This can be arranged to regulate overheated economics.

Answer 2

Answer:

A. Banks must pay more for short term loans from the government.

Explanation:

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