Overnight loans from one bank to another for reserve purposes entail an interest rate called the
A) prime rate.
B) discount rate.
C) federal funds rate.
D) treasury bill rate.

Question

Quizplus · Accepted Answer

Overnight loans from one bank to another for reserve purposes are known as federal funds, and the interest rate at which these transactions occur is called the federal funds rate. The Federal Reserve sets a target for the federal funds rate as a means of controlling the money supply and inflation.

Overnight Loans from One Bank to Another for Reserve Purposes