ECONOMICS
FEDERAL RESERVE
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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discount rate
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monetary policy
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inside lag
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tight money policy
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Detailed explanation-1: -The term discount rate refers to the interest rate charged to commercial banks and other financial institutions for short-term loans they take from the Federal Reserve Bank. The discount rate is applied at the Fed’s lending facility, which is called the discount window.
Detailed explanation-2: -The federal funds rate is the interest rate that banks charge each other to borrow or lend excess reserves overnight. 8 Law requires that banks must have a minimum reserve level in proportion to their deposits.
Detailed explanation-3: -The Federal Open Markets Committee (FOMC) sets the federal funds rate-also known as the federal funds target rate or the fed funds rate-to guide overnight lending among U.S. banks. It’s set as a range between an upper and lower limit. The federal funds rate is currently 4.50% to 4.75%.
Detailed explanation-4: -Overnight Federal Funds Rate is at 4.57%, compared to 4.58% the previous market day and 0.08% last year.
Detailed explanation-5: -The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank’s lending facility-the discount window.