Lowering the discount rate:

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

Discount Rate

This refers to the cost of borrowing for commercial banks and various deposit institutions, derived from their area's Federal Reserve Bank lending service.

Banks Borrow

Banks borrow refers to the process by which banks take loans from other banks, financial institutions, or the central bank to maintain liquidity and meet their loan obligations to depositors.

Cash Reserves

Funds that a person or entity keeps on hand to meet short-term and emergency funding needs.