The rate of interest charged by Federal Reserve banks for lending reserves to member banks is the

Question

Quizplus · Accepted Answer

The rate of interest charged by Federal Reserve banks for lending reserves to member banks is known as the discount rate. Therefore, the correct choice is C. The federal funds rate is the interest rate at which banks lend funds to other banks in the federal funds market. The prime rate is the interest rate that commercial banks charge their most creditworthy customers. The commercial paper rate is the interest rate at which companies can borrow short-term funds from the commercial paper market.

The Rate of Interest Charged by Federal Reserve Banks for Lending