Suppose the federal reserve makes a discount loan to a bank, Financial Management

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Suppose the federal reserve makes a discount loan to a bank

Suppose the Federal Reserve makes a discount loan to a bank.

What would be the major effect in the market for federal funds? (choose one and explain why)

Increase in demand for federal funds

Decrease in demand for federal funds

Increase in supply of federal funds

Decrease in supply of federal funds

Why?

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Financial Management: Suppose the federal reserve makes a discount loan to a bank

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Financial Management: Suppose the federal reserve makes a discount loan to a bank

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