(Answered) Question suppose the federal reserves discount rate is 7

Finance

Question: Suppose the Federal Reserve's discount rate is 7 percent. This afternoon the Federal Reserve Board announces that it is approving the request of several of its Reserve banks to raise their discount rates to 7.5 percent. What will happen to other interest rates tomorrow morning? Carefully explain the reasoning behind your answer. Would the impact of the discount rate change described above be somewhat different if the Fed simultaneously sold $100 million in securities through its Trading Desk at the New York Fed?

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