Final answer:
The immediate change in the business of public banks due to the Federal Reserve altering interest rates is attributed to the regulatory environment. The Federal Reserve, via open market operations, regulates the discount rate affecting the availability and cost of borrowing for banks.
Step-by-step explanation:
The component of the specific environment that has caused the immediate change in the business of public banks, in response to the Federal Reserve System revising interest rates and borrowing rates, is the regulatory environment. This aspect of the specific environment is responsible for the governance and oversight of banks and dictates how financial institutions must operate. The Federal Reserve, often simply referred to as the Fed, has a significant influence on the banking sector by regulating money supply and setting the discount rate.The discount rate is the interest rate at which public banks can borrow from the Federal Reserve. By affecting this rate through open market operations or by changing reserve requirements, the Fed can influence the supply curve of loanable funds.
Consequently, changes in the federal funds rate lead to a chain of events impacting the entire economy, including other short-term interest rates, long-term interest rates, foreign exchange rates, and eventually economic variables such as employment, output, and the prices of goods and services.The component of the specific environment that has caused the immediate change in the business of public banks is the Federal Reserve System's revisions of interest rates and borrowing rates. When the Federal Reserve revises these rates, it affects the lending rates of public banks. For example, if the Federal Reserve lowers interest rates, public banks may also lower their lending rates to attract more borrowers