One bank can borrow reserves from another bank, and the interest on the loan is called the federal funds rate.

Name: One bank can borrow reserves from another bank, and the interest on the loan is called the federal funds rate.
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This statement is true. Banks can borrow reserves from each other, and the interest rate on these overnight loans is called the federal funds rate. This rate is set by the Federal Reserve and is used as a benchmark for other interest rates in the economy.

One Bank Can Borrow Reserves from Another Bank, and the Interest