Asked by Aamir Anwar on Apr 27, 2024
Verified
The rate the Fed charges member banks for short-term loans is called the
A) discount rate
B) margin rate
C) federal funds rate
D) reserve requirement
Discount Rate
The interest rate charged by central banks for loans to commercial banks or the rate used in discounted cash flow analysis to determine the present value of future cash flows.
Federal Funds Rate
The Federal Funds Rate is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight, set by the Federal Reserve.
- Acquire knowledge about the Federal Reserve's objectives and the mechanisms it employs for policy decisions.
Verified Answer
JS
Jared SambergApr 30, 2024
Final Answer :
A
Explanation :
The discount rate is the interest rate the Federal Reserve charges commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility—the discount window.
Learning Objectives
- Acquire knowledge about the Federal Reserve's objectives and the mechanisms it employs for policy decisions.