During the past several years
A) the discount rate has been lower than the prime rate.
B) the discount rate has been higher than the prime rate.
C) the discount rate has been unrelated to the prime rate.
D) has been the same as the prime rate.

Question

Quizplus · Accepted Answer

The discount rate, which is the interest rate the Federal Reserve charges commercial banks for short-term loans, is typically lower than the prime rate. The prime rate is the interest rate that banks charge their most creditworthy customers and is influenced by the Federal Reserve's policies, including the discount rate. Therefore, it's common for the prime rate to be higher than the discount rate, reflecting the additional risk and costs associated with lending to consumers and businesses compared to the risk-free rate the Federal Reserve offers to banks.

During the Past Several Years