ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The reserve money the Fed requires all banks to keep on hand.
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The interest rate the banks charge each other for loans.
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The interest rate the Fed charges commercial banks for short term loans
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How much a good/service is discounted for its customers.
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Detailed explanation-1: -Basic Info. US Discount Rate is at 4.75%, compared to 4.75% the previous market day and 0.25% last year. This is higher than the long term average of 1.94%.
Detailed explanation-2: -A: The Federal Reserve sets a key interest rate, called the federal funds rate, which is the rate banks charge to each other for very short-term loans. The Federal Reserve lowered the target range for the federal funds rate to 0 to 1/4 percent.
Detailed explanation-3: -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.
Detailed explanation-4: -In banking, the discount rate is the interest rate that the Federal Reserve charges banks for short-term loans.