If the Fed Increases the Discount Rate

Multiple Choice

If the Fed increases the discount rate,

A) it will then increase the required reserve ratio as well.
B) it will then decrease the required reserve ratio to offset any possible contractionary effect.
C) it will be easier for banks to secure the reserves needed to support a higher volume of commercial loans.
D) banks will face a higher cost of borrowing and will pass some of this cost onto customers in terms of higher interest rates.