ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Discount Rate
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inflation
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Reserve Requirement
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None of the above
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Detailed explanation-1: -Borrowing from the Fed allows banks to get themselves back over the minimum reserve threshold. A bank borrows money from the government’s central bank utilizing what is known as the discount window. 1. Borrowing via the discount window is convenient because it’s always available.
Detailed explanation-2: -The federal funds rate is the target interest rate set by the FOMC. This is the rate at which commercial banks borrow and lend their excess reserves to each other overnight. The FOMC sets a target federal funds rate eight times a year, based on prevailing economic conditions.
Detailed explanation-3: -The federal funds rate is the Fed’s main benchmark interest rate that influences how much consumers pay to borrow and how much they’re paid to save, rippling through to influence yields on certificates of deposit (CDs) and savings account to credit card rates and home equity lines of credit (HELOCs).
Detailed explanation-4: -The current Federal Reserve interest rate, or federal funds rate, is 4.50% to 4.75% as of Feb. 2, 2023.