When banks borrow directly from the Fed,the interest rate they pay is called the:
A) prime rate.
B) discount rate.
C) Federal Funds rate.
D) required reserve rate.

Question

Quizplus · Accepted Answer

When banks borrow directly from the Fed, they are usually borrowing overnight loans, also known as discount loans. The interest rate they pay on these loans is called the discount rate. The prime rate is the interest rate that banks charge their most creditworthy customers, the Federal Funds rate is the interest rate that banks charge each other for overnight loans, and the required reserve rate is the percentage of deposits that banks must hold in reserve.

When Banks Borrow Directly from the Fed,the Interest Rate They