Choice "B" is correct. The discount rate refers to the rate established by the Federal Reserve for short-term (often overnight) loans it makes to member banks.
Choice "a" is incorrect. The discount rate is the rate the Federal Reserve charges, not commercial banks.
Choice "c" is incorrect. The discount rate is the rate the Federal Reserve charges, not commercial banks.Choice "d" is incorrect. This would be the bank's reserve ratio - not the discount rate.
