Which of the following statements is incorrect with respect to the federal funds rate?
A) It is the rate charged by financial institutions on loans they extend to each other.
B) It is not influenced by the supply of and demand for funds in the federal funds market.
C) The federal funds rate is closely monitored by all types of firms.
D) Many market participants view changes in the federal funds rate as an indicator of potential changes in other money market rates.
E) The Federal Reserve adjusts the amount of funds in depository institutions in order to influence the federal funds rate.
Correct Answer:
Verified
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