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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.

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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.


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


Which term refers to the rate of interest the Federal Reserve Bank charges member banks?

Discount rate


What is the rate of interest the Federal Reserve Bank charges member banks called?

discount rate


What happens when the Federal Reserve chairman indicates that monetary policy requires a rate increase of interest at the Discount Window and an increase of reserve requirements of member banks?

If the Federal Reserve chairman says that overnight loan rate at the Discount Window will be raised, and reserve requirements of member banks will be raised, this in turn will effect interest rates of many kinds. Normally it means the prime rate of major banks to their prime customers will rise. This will also increase mortgage rates and all types of loans. The Fed does this to further its monetary policies. Normally, the Fed's action means it believes that economic activity in the economy needs to reduced to a certain extent.

Related Questions

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

monetary policy


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.


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


Which term refers to the rate of interest the Federal Reserve Bank charges member banks?

Discount rate


What is the rate of interest the Federal Reserve Bank charges member banks called?

discount rate


The rate of interest the Federal Reserve Bank charges member banks is called the .?

Discount rate


What is the interest rate the Federal Reserve charges member banks called?

The interest rate that the Federal Reserve charges member banks is called the discount rate. This rate is used for loans that banks take from the Federal Reserve's discount window, which provides them with short-term liquidity. Changes in the discount rate can influence overall monetary policy and affect interest rates throughout the economy.


Which bank refers to the rate of interest the federal reserve bank charges member banks?

discount rate


How does tesco attract new customers?

Tesco attracts new customers by offering discount codes upon checkout. Tesco also has a club card and a bank that only its customers can utilize. In order to use Tesco one must first be a member.


What happens when the Federal Reserve chairman indicates that monetary policy requires a rate increase of interest at the Discount Window and an increase of reserve requirements of member banks?

If the Federal Reserve chairman says that overnight loan rate at the Discount Window will be raised, and reserve requirements of member banks will be raised, this in turn will effect interest rates of many kinds. Normally it means the prime rate of major banks to their prime customers will rise. This will also increase mortgage rates and all types of loans. The Fed does this to further its monetary policies. Normally, the Fed's action means it believes that economic activity in the economy needs to reduced to a certain extent.


Store Discount Programs?

Store discount programs have been developed by stores to reward their loyal customers and to collect information about the purchases those customers make in order for them to better understand their sales demographic. Use store discount programs to your advantage by inquiring about them at stores you frequent and taking advantage of them whenever possible. Always inquire about any fees before signing up for a store discount program to avoid hidden fees. Once you are a member of a store's discount program, be sure to carry your membership information with you when shopping and use your membership to receive discounts at every available opportunity.


What is the second method the Board of Governors uses to control monetary policy?

The approval of discount rates (interest rates at which member banks may borrow short-term funds from their Reserve Bank).