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Discount rate = inflation expectation + risk premium for the investment, so when inflation goes up, your discount rate should go up

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What describes the most likely effect of the Fed lowering the discount rates on overnight loans?

An increase in the money supply


Which policy relates to raising the discount rate to member banks will in turn cause the member banks to raise interest rates to their own customers?

The policy that involves raising the discount rate to member banks is known as monetary policy, specifically through the mechanism of the Federal Reserve's discount rate. When the Federal Reserve increases the discount rate, it becomes more expensive for banks to borrow funds, leading them to raise interest rates for their customers to maintain their profit margins. This tightening of monetary policy can help combat inflation but may also slow down economic growth by making borrowing more expensive for consumers and businesses.


Which policy Raising the discount rate to member banks will in turn cause the member banks to raise interest rates to their own customers?

Raising the discount rate increases the cost of borrowing for member banks, as they must pay more to access funds from the central bank. In response, member banks typically raise interest rates for their customers to maintain their profit margins and cover the higher costs. This increase in interest rates can lead to reduced borrowing and spending by consumers and businesses, potentially slowing down economic activity. Overall, this policy is a tool used by central banks to manage inflation and influence economic growth.


Why did the federal reserve raise interest rates in 1928 and 1929?

From 1923 to about 1928, the feds had kept the rates artificially low, but this increased the chance of runaway inflation, so it had no choice but to raise it again.


Raising the discount rate to members banks will in turn cause the member banks to raise interest rates to their own customers?

Prime Rate ---- the rate at which banks lend money to each other and the Federal Reserve lends money to banks

Related Questions

What describes the most likely effect of the Fed lowering the discount rates on overnight loans?

An increase in the money supply


Raising the discount rate to member banks will in turn cause the member banks to raise interest rates to their own customers?

monetary policy


Where can you find online discount hotel rates?

"There are several different websites that you can look for discount hotel rates. Some of these websites include hotel-rates, expedia, hotwire and orbitz."


What will the federal government do in an attempt to encourage saving and investing?

RAiSE diVidENd RAtES. . .A+


Will a parking ticket raise insurance rates?

Generally parking violation will not effect your insurance. These are not considered moving violations and thererfore will not increase the premiums.


Which policy relates to raising the discount rate to member banks will in turn cause the member banks to raise interest rates to their own customers?

The policy that involves raising the discount rate to member banks is known as monetary policy, specifically through the mechanism of the Federal Reserve's discount rate. When the Federal Reserve increases the discount rate, it becomes more expensive for banks to borrow funds, leading them to raise interest rates for their customers to maintain their profit margins. This tightening of monetary policy can help combat inflation but may also slow down economic growth by making borrowing more expensive for consumers and businesses.


Can trade discount rates change?

hi, yes offcourse trade discount rates can be changed but they should be changed according to a set pattern only. thankyou


Does attending Second traffic school affect insurance rates?

Are you attending this second traffic school to get a point taken off your record....it so then NO it will not affect your rates....but if are just taking the class then no it will not effect your rates.....unless you take a defensive driving course, then you may get a discount on your insurance.


What does factoring rates mean?

Factoring rates apply to the practice of businesses selling receivables at a discount to a factor, who then collects the funds. The factoring rate is the amount of the discount at which the receivable is purchased.


What is the effect of single and discount series?

Of what?


Does federal reserve sysytem effect the fixed rate directly?

Directly? What does that mean? The Fed has several ways to raise interest rates. When they do something that raises rates that effects big banks and little banks alike promptly and these raise their rates. Over time, too, adjustable loan rates reset to the new higher rate (or lower rate) but this takles more time as the reset annual date is reached on each loan.


Will a traffic ticket for cutting corners raise your insurance rates?

A traffic ticket could raise your insurance rates. It won't raise them right away, but may come into play when the insurance is being renewed.