ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the macroeconomic policy laid down by the central bank
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interest rate charged to commercial banks and other depository institutions on loans they receive
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implies avoiding both prolonged inflation and deflation
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None of the above
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Detailed explanation-1: -The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from the Fed’s lending facility, the discount window. The discount rate charged for primary credit (the primary credit rate) is set above the usual level of short-term market interest rates.
Detailed explanation-2: -The federal funds rate is the interest rate banks charge each other on loans of reserves.
Detailed explanation-3: -The federal funds rate is the interest rate banks charge each other to borrow funds, whereas the discount or bank rate is the rate the Federal Reserve charges commercial banks to borrow funds.
Detailed explanation-4: -In banking, the discount rate is the interest rate that the Federal Reserve charges banks for short-term loans. Discount lending is a key tool of monetary policy and part of the Fed’s function as the lender-of-last-resort.
Detailed explanation-5: -discount rate, also called rediscount rate, or bank rate, interest rate charged by a central bank for loans of reserve funds to commercial banks and other financial intermediaries.