Question

You want a new truck. How can the Federal Reserve's raising of the discount rate affect your decision to purchase the truck?

Answer 1

Answer: D

Explanation: It will raise interest rates and make your truck payment higher.

Answer 2

The correct answer is through interest rates.

When the Federal Reserve increases the discount, there will be a corresponding increase by banks in what rate they will lend at.

So, for a person buying a new car, they will see an increase in how much it costs to buy a car via loans.