ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Reserve Requirement
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Discount Rate
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Interest on Reserves
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Open Market Operations
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Detailed explanation-1: -The federal discount rate is the interest rate the Federal Reserve (Fed) charges banks to borrow funds from a Federal Reserve bank. The Fed discount rate is set by the Fed’s board of governors, and can be adjusted up or down as a tool of monetary policy.
Detailed explanation-2: -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-3: -The correct answer is B) Discount loans; Sources.
Detailed explanation-4: -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.
Detailed explanation-5: -Bank rate, also known as discount rate in American English, is the rate of interest which a central bank charges on its loans and advances to a commercial bank.