The discount rate is the interest rate that banks:
A) charge borrowers with the lowest credit risk.
B) charge borrowers with the highest credit risk.
C) pay when borrowing from other banks.
D) pay when borrowing directly from the Fed.

Question

Quizplus · Accepted Answer

The discount rate is the interest rate at which banks can borrow funds directly from the Federal Reserve. Therefore, the correct answer is D - pay when borrowing directly from the Fed.

The Discount Rate Is the Interest Rate That Banks