When the Fed raises the discount rate, it:
A. lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public.
B. raises the cost of borrowing from the Fed, discouraging banks from making loans to the general public.
C. increases the amount of excess reserves that banks hold, encouraging them to make loans to the general public.
D. increases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.
Answer: B
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