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 ?

Question

Xaibi Aslam · Accepted Answer

Not change the money supply because banks already have excess reserves they cannot lend

Xaibi Aslam · Answer

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

Xaibi Aslam · Answer

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

Xaibi Aslam · Answer

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

Question #48577