By raising the discount rate, the fed leads banks to make _ loans to households and firms, which will _ checking account deposits and the money supply.

By raising the discount rate, the fed leads banks to make fewer loans to households and firms, which will decrease checking account deposits and the money supply. In a discounted cash flow (DCF) analysis, the discount rate is the interest rate that is used to calculate the present value of future cash flows.

This aids in determining whether the cash flows from a project or investment will be more valuable than the capital expenditure required to fund it in the present. For instance, if an investor invests $1,000, they anticipate a 10% return after a year. In that instance, 10% should be used as the discount rate.

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By raising the discount rate, the fed leads banks to make _________ loans to households and firms, which will _________ checking account deposits and the money supply.

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By raising the discount rate, the fed leads banks to make _ loans to households and firms, which will _ checking account deposits and the money supply.