Predict whether unemployment will increase or decrease as a result of each of the following monetary policies.
Question:
a. A reduction in the discount rate from 6 percent to 5.5 percent
b. An open market sale by the Federal Reserve Bank
c. An increase in the required reserve ratio from 10 percent to 12 percent
Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...
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a Decrease as a result of an increa...View the full answer
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