If the economy is in decline, and the Federal Reserve wants to encourage banks to lend to consumers, which step will the Fed likely take?

Encourage the sale of government securities.

Decrease the discount rate.

Increase the federal funds rate.

Raise the prime rate.

Question

If the economy is in decline, and the Federal Reserve wants to encourage banks to lend to consumers, which step will the Fed likely take?

 Encourage the sale of government securities.

 Decrease the discount rate.

 Increase the federal funds rate.

 Raise the prime rate.

anonymous · Answer

decreasing the discount rate will make it cheaper for banks to get money and thus will increase their lending.

anonymous · Answer

Thanks @ddrayer can you help me with my other questions?

anonymous · Answer

of course