Business, 01.08.2020 16:01 robert7248

Decreasing the discount rate is Group of answer choices a contractionary policy because it reduces banks' profit margins by lowering the return on lending. g

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Answer from: eylinglez3ovm16v

Complete Question:

Decreasing the discount rate is:

Group of answer choices:

a) an expansionary policy stance because consumers and businesses can now borrow funds directly from the Fed at a lower cost, thereby encouraging private spending.

b) a contractionary policy stance because the cost of borrowing funds falls, thereby encouraging consumption

and investment spending.

c) a contractionary policy because it reduces banks' profit margins by lowering the return on lending.

d) an expansionary policy stance because it will be less costly for banks to borrow funds and this puts

downward pressure on interest rates in the economy.

d) an expansionary policy stance because it will be less costly for banks to borrow funds and this puts

downward pressure on interest rates in the economy.

Explanation:

Decreasing the discount rate is an expansionary policy stance because it will be less costly for banks to borrow funds and this puts downward pressure on interest rates in the economy.

An expansionary monetary policy can be defined as a strategic policy or actions of Central Bank such as "The Fed" that expand or increases the money supply so as to stimulate the economy. The expansionary monetary policies could also be adopted to lower short-term interest rates. Consequently, the effect of the expansionary policy would be to shift the aggregate demand curve to the right, therefore causing economic growth within the country.

Additionally, the interest rate charged on money supply or currencies to banks by the central bank is known as the discount rate.

In conclusion, when banks are charged lowered discount rates, it will cost them less to borrow money from the central bank and as a result there would be an increase in money supply; thus, availing them the opportunity to give out more loans to their customers.

Answer from: Quest

Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan

Answer from: Quest

Alot of credit card rewards

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