The discount rate is the interest rate that
A)the Fed pays commercial banks on their reserves held at the Fed.
B)commercial banks charge their customers.
C)the Fed charges commercial banks when it loans reserves to the banks.
D)commercial banks charge each other for the loan of reserves.
E)the Fed charges the government for loans.

Question

Quizplus · Accepted Answer

The discount rate is the interest rate the Federal Reserve charges commercial banks for borrowing reserves directly from the Fed.

The Discount Rate Is the Interest Rate That