Lowering the discount rate is one of the actions that needs to be taken by the FOMC if it wishes to pursue contractionary monetary policy using open market operations. Hence, option C holds true.
A contractionary monetary policy is a policy implemented by the authorities to control the situation of an economy. This is done by lowering or decreasing the supply of money in an economy.
One of the ways to decrease the supply of money in the market of an economy is by lowering the rates of discount. Low discount rates discourage the banks.
Hence, option C holds true regarding contractionary monetary policy.
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