04.07.2022 - 18:16

The Federal Funds rate is the A. interest rate banks pay when they borrow directly from the Fed. B. overnight lending rate on loans from one major bank to another. C. interest rate on short-term Treasury securities. D. ratio of reserves to deposits.

Question:

The Federal Funds rate is the

A. interest rate banks pay when they borrow directly from the Fed.

B. overnight lending rate on loans from one major bank to another.

C. interest rate on short-term Treasury securities.

D. ratio of reserves to deposits.

Answers (1)
  • Muriel
    April 10, 2023 в 01:24
    The answer is A. The Federal Funds rate is the interest rate that banks pay when they borrow directly from the Federal Reserve. This rate is used to influence other interest rates, like those for mortgages and credit cards. By adjusting the Federal Funds rate, the Fed can control the money supply and economy. The other options are not accurate definitions of the Federal Funds rate.
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