ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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inflation
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interest
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discount rate
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reserve requirement
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Detailed explanation-1: -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-2: -The discount rate is the interest rate charged by the Fed for loans it makes through the Fed’s discount window. Because banks will not likely borrow at a higher rate than they can borrow from the Fed, the discount rate acts as a ceiling for the federal funds rate.
Detailed explanation-3: -When a member bank borrows reserves from the Fed, it pays an interest rate called the discount rate. buys or sells previously issued government bonds.