10. The discount rate and the federal funds rate The Federal Reserves establishes the interest rate charged on funds it loans to banks and other financial institutions. A lower interest rate V the incentive to borrow funds from the Federal Reserve, thereby V the quantity of reserves in the banking system, which causes the money supply to V . When the Federal Reserve loans more funds to banks and another financial institutions, the quantity of reserves in the banking system V and the money supply V . 10. The discount rate and the federal funds rate The Federal Reserves establishes the interest rate charged on funds it loans V the incentive to borrow funds from the Federal Reserve, thu the money supply to V . reduces -era| Reserve loans more funds to banks and another financial increases V and the money supply V . The Federal Reserves establishes the interest rate charged on funds it loans to banks and other financial institutions. A lower interest rate V the incentive to borrow funds from the Federal Reserve, thereby V the quantity of reserves in the banking system, which causes the money supply to v . increasing When the Federal Reserve loans more funds to banks and another financial instit decreasing : ntity of reserves in the banking system V and the money supply V . The Federal Reserves establishes the interest rate charged on funds i V the incentive to borrow funds from the Federal Rese which causes the money supply to V . When the Federal Reserve loans m s to banks and another in V and the money V The Federal Reserves establishes the interest rate charged on funds it loans to banks and ot V the incentive to borrow funds from the Federal Reserve, thereby the money supply to V _ increases eral Reserve loans more funds to banks and another financial institutions, the V and the money supply V . The Federal Reserves establishes the interest rate charged on funds it loans to banks and other financial institutions V the incentive to borrow f . n decreases e Federal Reserve, thereby Y the quantity of I which causes the money supply to V increases When the Federal Reserve loans more fu and another financial institutions, the quantity of reserves in V and the money supply V