ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Specific type of interest rate placed on loans from the Federal Reserve to financial institutions
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Inflation
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Discount rates
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Reserve requirements
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Government securities (bonds)
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Explanation:
Detailed explanation-1: -The federal funds rate, or fed funds rate, is set by the Federal Open Market Committee (FOMC) of the Federal Reserve. It can be defined as the interest rate charged to various lending institutions such as banks on unsecured loans that are borrowed overnight.
Detailed explanation-2: -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-3: -In banking, the discount rate is the interest rate that the Federal Reserve charges banks for short-term loans.
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