Answer: OC. keep more money on hand instead of lending it.
Step-by-step explanation:When the Federal Reserve raises the discount rate, it increases the cost of borrowing for banks from the central bank. In response to this, banks are encouraged to keep more money in their reserves instead of lending it out to customers. This action helps to reduce the money supply in the economy and is one of the tools the Federal Reserve uses to control inflation and stabilize the economy. By keeping more money on hand, banks can meet the increased reserve requirements and avoid additional costs associated with borrowing from the central bank. As a result, the availability of credit may decrease, and interest rates on loans to customers may increase.