Final answer:
When the Federal Reserve loans money to a bank at the discount window, it leads to an increase in both bank reserves and the monetary base, typically leading to lower interest rates.
Step-by-step explanation:
When the Federal Reserve makes a loan at the discount window to a bank, it affects the monetary policy and overall economy. The correct option in the scenario given is: It will increase bank reserves and increase the monetary base. The discount window is a tool for monetary policy whereby the central bank lends money to commercial banks. When loans are made from the Fed to the banks, this directly increases the reserves of the commercial bank sector. Simultaneously, this also increases the monetary base because the Federal Reserve has created new reserves that are now held by the banks. This can lead to a decrease in market interest rates as banks have more reserves and are thus more likely to lend out money, which increases the money supply.