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