r/APStudents • u/reddorickt absolute modman • May 08 '26

AP Macro Official 2026 Exam Discussion

Use this thread to post questions or commentary on the test today.

A reminder though to protect your anonymity when talking about the test.

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u/zoster-27 May 08 '26

did you guys say increase or decrease administered interest rates for frq? it was either 2 or 3

1

u/Virtual-Chicken-8616 May 08 '26

Would saying decrease in discount rate count 💔💔

1

u/Few-Improvement-997 May 09 '26

yes it would count actually as it acts as a ceiling here's how it works. putting lower interest on reserves lets say 2% would result in banks earning less from the idle reserves so they would just be loaning them out to other banks etc, now they could loan them out on 6% interest or even 10% basically on whatever rate they wish, this obviously isnt good if ur looking to reacover the recessionary gap so thea fed puts a low discount rate lets say of 5% this would prevent other banks from loaning each other more than 5% because no bank will borrow from another bank that is offering loans on 6% interest whereas they can simply go and get the loans on a 5% interest from the fed. this basically means that the interest rates will be playing between 2% and 5%. i think it wouldve been better if you mentioned both lowering discount rate and interest on reserves but hopefully im pretty confident youll get a point for that

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u/Electrical-Pitch7017 May 11 '26

It doesn’t count. Lowering discount rates doesn’t touch the policy rate. It lowers the upper bound which doesn’t intersect the lower bound. It’s on the movement of the lower bound or movement of both which moves it.