The federal funds rate is: equal to the rate of inflation. the interest rate at
ID: 1112144 • Letter: T
Question
The federal funds rate is:
equal to the rate of inflation.
the interest rate at which banks borrow from and loan to each other overnight.
the interest rate at which banks borrow from the Federal Reserve.
the return to stock markets over the long term.
an interest rate that is some fixed amount above the prime lending rate.
a.equal to the rate of inflation.
b.the interest rate at which banks borrow from and loan to each other overnight.
c.the interest rate at which banks borrow from the Federal Reserve.
d.the return to stock markets over the long term.
e.an interest rate that is some fixed amount above the prime lending rate.
Explanation / Answer
Answer
option b
the interest rate at which banks borrow from and loan to each other overnight
Federal fund rate is a rate on short-run loans which banks borrow from each other