Under current policy, the Fed ties the discount rate to the
A) prime rate.
B) AAA corporate bond rate.
C) federal funds rate.
D) long-term government bond rate.

Question

Quizplus · Accepted Answer

The discount rate is the interest rate at which banks can borrow money from the Federal Reserve Bank. The Fed ties the discount rate to the federal funds rate, which is the interest rate at which banks lend and borrow reserves from each other overnight. By tying the discount rate to the federal funds rate, the Fed can influence overall interest rates in the economy.

Under Current Policy, the Fed Ties the Discount Rate to the