Answer:
D. increases; increase
Explanation:
This is the payment of loan interest and other charges upfront at the time of obtaining a loan facility. The loan charges are always deducted from the principal at the time of loan disbursement,
When the Federal Reserve extends a discount loan to bank, it increases the monetary base which is the sum of currency in circulation held by the public and the amount held by banks as reserves, and the reserve which is held by the Federal Reserve will also increase.
