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Question
In 2002, the Federal Reserve changed its discount lending procedures. Which of the following statements is correct?A. For most of its history the Federal Reserve has lent reserve to banks at a rate equal to the target federal funds rate; after 2002 the rate would be below the target federal funds rate.
B. The changes made in 2002 have made it more difficult for the Fed to meet its interest-rate stability objective.
C. Before 2002 the Fed discouraged banks from borrowing and actually destabilized the interbank market for reserves.
D. The Fed now controls the quantity of credit extended as well as its price.
Answer
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