The discount rate is the rate of interest that banks pay to borrow money from the Federal Reserve. Which statement accurately describes how discount rates affect the economy?
A.
A lower discount rate makes it easier for people to acquire loans from banks, which allows them to spend more money.
B.
A lower discount rate makes it harder for people to earn money on deposits, which encourages them to spend rather than save.
C.
A higher discount rate allows banks to earn higher profits on revenue they generate, which strengthens the overall economy.
D.
A higher discount rate allows people to earn more interest on bank deposits, which encourages them to save more money.
A. A lower discount rate makes it easier for people to acquire loans from banks, which allows them to spend more money.
Lower discount rates encourage borrowing and spending, which can stimulate economic growth.