SIE Exam Question 219: Answer and Explanation

Question: 219

Which of the following is a consequence of the Federal Reserve increasing the discount rate?

• A. A slowing of the economy
• B. Demand increases
• C. Reduction in all other rates
• D. None of the above

Correct Answer: A

Explanation:

If the Federal Reserve were to increase the discount rate, all other rates would go up, demand would decrease, and ultimately, the economy would be slowed.