Asked by Shiva Gupta on Jul 29, 2024
Verified
The federal funds rate is the interest rate for
A) reserves that banks borrow from the Fed.
B) the preferred customers of the banks.
C) reserves borrowed by one bank from another bank.
D) banks belonging to the Federal Reserve System.
Federal Funds Rate
The interest rate banks and other depository institutions charge one another on overnight loans made out of their excess reserves.
Borrowed Reserves
Funds that commercial banks borrow from the central bank to meet reserve requirements, often indicative of a tight monetary policy.
Fed
The Federal Reserve System, which is the central bank of the United States responsible for monetary policy.
- Analyze the effects of Federal Reserve actions on interest rates and the money supply.
Verified Answer
Learning Objectives
- Analyze the effects of Federal Reserve actions on interest rates and the money supply.
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