Generally, the prime interest rate
A)moves in the opposite direction as the federal funds rate.
B)remains constant over long periods of time.
C)is highly inflexible downward.
D)moves in the same direction as the federal funds rate.

Question

Quizplus · Accepted Answer

The prime interest rate typically moves in the same direction as the federal funds rate because banks adjust their lending rates based on changes in the federal funds rate, which influences the cost of borrowing for banks.

Generally, the Prime Interest Rate