please help asap i do have an answer i think it is i just want to make sure
how does the fed encourage banks to loan more money?
a) by reducing the discount rate
b) by increasing the interest rate allowed
c) by borrowing from their own member banks
d) by increasing the reserved required of banks

Question

please help asap i do have an answer i think it is i just want to make sure
how does the fed encourage banks to loan more money?
a) by reducing the discount rate
b) by increasing the interest rate allowed 
c) by borrowing from their own member banks
d) by increasing the reserved required of banks

anonymous · Answer

I think it is b

rina.r · Answer

Its  'A ' b coz
If it's a term loan (fixed payments, fixed period, fixed rate, etc - ie not a line of credit), it will require a new loan. The new loan will fund the old loan in its entirety and the additional amounts borrowed. If you do a lot of business with a particular bank and they consider you a valuable customer, they will pull strings to keep you happy and in certain cases they may advance additional prinicpal on a loan, but it is very rare. If it is a line of credit then you can draw on it as necessary.