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Pennsylvania State University *

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351

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Economics

Date

Nov 24, 2024

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1

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Tools of Monetary Policy (15.2-15.3) (2) Discount Policy ® Fed set the discount rate and the terms of discount lending. e All depository institutions, including savings and loans and credit unions can borrow from the Fed. ® Discount rate:rate bank’s pay to borrow from the Fed. ® Federal Funds Rate: rate banks charge each other on ovemight loans. ® Since 2003, the discount rate is higher than the target for the federal funds rate.
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