ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -The Fed also sets the discount rate, the interest rate at which banks can borrow directly from the central bank. If the Fed raises interest rates, it increases the cost of borrowing, making both credit and investment more expensive.
Detailed explanation-2: -When the Fed increases interest rates, it becomes more expensive to borrow money. It means higher rates for credit cards, auto loans, and any industry that relies on financing. That’s painful for consumers, especially those relying more heavily on credit cards or loans.
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%.