The federal funds market is the market for overnight lending and borrowing of reserves.

Question

Quizplus · Accepted Answer

The statement is true. The federal funds market is where commercial banks and other depository institutions borrow and lend reserves among themselves to manage their daily reserve requirements and maintain compliance with the Federal Reserve's regulations. The interest rate in this market is the federal funds rate, which is a key benchmark for short-term interest rates and monetary policy.

The Federal Funds Market Is the Market for Overnight Lending