Assume that commercial banks are holding excess reserves because business firms and consumers are not willing to borrow money A decrease in the discount rate is likely to ?
A. Not change the money supply because banks already have excess reserves they cannot lend

B. Decrease the money supply because it is now cheaper for banks to borrow from the central bank instead instead of buying government securities

C. decrease the money supply because it will now be more expensive for business firms and consumers to borrow money

D. increase the money supply because it is now cheaper for banks to borrow from the central bank

Be the first to comment if anything wrong with this mcq
Your comment successfully submitted!
It will automatically posted after review and approval by our staff member.