Question

When the Federal Reserve extends a discount loan to a​ bank, the monetary base​ ________ and reserves​ ________. A. remains​ unchanged; increase B. ​increases; remain unchanged C. remains​ unchanged; decrease D. ​increases; increase

Answer 1

The correct answer is D. ​increases; increase,

Step-by-step explanation:

In economics, the monetary base (WB), also called the money base, money reserve or high power money, is constituted by the sum of legal money in the hands of the public (banknotes and coins) and bank reserves, which are a in turn, the sum of the legal money in the hands of the banks and their deposits in the issuing central bank, which is a bank and state banker.