The prime interest rate usually
A)rises when the federal funds rate rises.
B)rises when the discount rate falls.
C)falls when the federal funds rate rises.
D)falls when the Fed sells bonds in the open market.

Question

Quizplus · Accepted Answer

The prime interest rate typically rises when the federal funds rate rises because banks' cost of borrowing increases, leading them to raise the rates they charge their most creditworthy customers.

The Prime Interest Rate Usually