Asked by Carrie Steel on Apr 24, 2024
Verified
The discount rate is the rate banks charge one another for short-term loans.
Discount Rate
The interest rate charged by central banks on loans to commercial banks or financial institutions, influencing monetary policy and economic activity.
Short-term Loans
Loans that are intended to be paid back within a short duration, typically less than a year, often used for immediate cash flow needs.
- Recognize the functions and significance of different rates such as the discount rate.
Verified Answer
AA
Ahmed Abdelsalam7 days ago
Final Answer :
False
Explanation :
The discount rate is the interest rate set by central banks (such as the Federal Reserve in the United States) at which they lend to commercial banks, not the rate banks charge one another. The rate banks charge each other for short-term loans is typically referred to as the federal funds rate in the U.S.
Learning Objectives
- Recognize the functions and significance of different rates such as the discount rate.
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