Lowering the Discount Rate Is a Way to Expand the Money

Multiple Choice

Lowering the discount rate is a way to expand the money supply because

A) it encourages banks to borrow from the Fed so they can more easily accommodate their customers' needs for loans
B) it encourages business customers to borrow directly from the Fed
C) a lower discount rate reduces the amount of reserves banks are required to keep
D) a lower discount rate automatically reduces excess reserves
E) it encourages banks to sell U.S.government securities and increase their cash reserves