which of the following best describes the federal funds rate? choose 1 answer: a the interest rate that the…

which of the following best describes the federal funds rate? choose 1 answer: a the interest rate that the federal reserve pays for required reserves b the interest rate banks charge other banks for long - term loans c the interest rate that the federal reserve charges banks for short - term loans d the interest rate banks charge other banks for short - term loans e the fraction of deposits that a bank must keep deposited at the federal reserve

which of the following best describes the federal funds rate? choose 1 answer: a the interest rate that the federal reserve pays for required reserves b the interest rate banks charge other banks for long - term loans c the interest rate that the federal reserve charges banks for short - term loans d the interest rate banks charge other banks for short - term loans e the fraction of deposits that a bank must keep deposited at the federal reserve

Answer

Brief Explanations:

The federal - funds rate is the interest rate at which depository institutions (banks) lend reserve balances to other banks on an overnight basis, which are short - term loans. Option A is about the rate the Fed pays for required reserves, Option B is about long - term loans between banks, Option C is about the rate the Fed charges banks for short - term loans (discount rate), and Option E is about the reserve requirement ratio.

Answer:

D. The interest rate banks charge other banks for short - term loans