The discount rate is the interest rate charged by:
A) major banks to their best customers.
B) banks for overnight loans to other banks.
C) the Fed on loans of reserves to banks.
D) banks for loans of less than 24 hours.

Question

Quizplus · Accepted Answer

The discount rate is the interest rate at which banks can borrow money directly from the Federal Reserve (the Fed) on short-term loans to fulfill reserve requirements. Therefore, the correct answer is C.

The Discount Rate Is the Interest Rate Charged By