Discount rate and the federal funds rate

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1. What is the difference between the Federal Reserve’s “discount rate” and the “federal funds” rate? Why is the discount rate in the US not as important in financial markets as the federal funds rate?

2. Why is it not possible for the Fed to predict exactly how large an increase in the money supply (M₁) will result from a given open market purchase.

Reference no: EM13732851

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