The discount rate is typically _______ the federal funds rate.

Question

Quizplus · Accepted Answer

The discount rate is typically higher than the federal funds rate, as it is the rate at which banks borrow directly from the Federal Reserve, while the federal funds rate is the rate at which banks borrow from each other. The discount rate is usually higher because it is considered a lender of last resort option for banks in need of funds, while borrowing from other banks is seen as less risky.

The Discount Rate Is Typically _______ the Federal Funds Rate