scenario: over the last several months, there has been a rapid increase in the number of loans that banks…

scenario: over the last several months, there has been a rapid increase in the number of loans that banks have provided for mortgages and small businesses. this change has raised concerns for the fed. today, the fed has announced an increase in the interest rates that it is charging banks. in this scenario, what is the fed trying to do by increasing interest rates? check all that apply. decrease the amount of money that banks have to lend increase the money supply for banks reduce the amount of available credit discourage consumer borrowing by increasing interest rates on loans encourage banks to loan more money

scenario: over the last several months, there has been a rapid increase in the number of loans that banks have provided for mortgages and small businesses. this change has raised concerns for the fed. today, the fed has announced an increase in the interest rates that it is charging banks. in this scenario, what is the fed trying to do by increasing interest rates? check all that apply. decrease the amount of money that banks have to lend increase the money supply for banks reduce the amount of available credit discourage consumer borrowing by increasing interest rates on loans encourage banks to loan more money

Answer

Brief Explanations:

When the Fed increases interest - rates it charges banks, banks have to pay more to borrow from the Fed. This makes banks less likely to borrow and lend. Higher interest rates also discourage consumers from borrowing. It reduces the amount of available credit and decreases the money banks have to lend. It does not increase the money supply for banks or encourage banks to loan more money.

Answer:

decrease the amount of money that banks have to lend reduce the amount of available credit discourage consumer borrowing by increasing interest rates on loans