Question: How can changes in the central bank loan (discount) rate and reserve requirements affect the operations of depository institutions? What happens to the legal reserves

How can changes in the central bank loan (discount) rate and reserve requirements affect the operations of depository institutions? What happens to the legal reserves of the banking system when the Fed grants loans through the discount window? How about when these loans are repaid? What are the effects of an increase in reserve requirements?

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The Discount Window is the department in each Federal Reserve Bank that receives requests to borrow ... View full answer

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