The volume of loans that the Fed makes to banks is affected by the Fed's setting of the interest rate on these loans,called the

Question

Quizplus · Accepted Answer

The interest rate that the Fed sets for loans to banks is known as the discount rate. Therefore, the correct choice is C. The federal funds rate and interbank rate also affect the volume of loans, but they do not directly refer to the interest rate that the Fed charges banks for loans. The prime rate is set by commercial banks and is not directly controlled by the Fed.

The Volume of Loans That the Fed Makes to Banks