Equilibrium in the market for bank reserves determines the
A) federal funds rate.
B) inflation rate.
C) price level.
D) 30-year Treasury bond rate.
E) exchange rate.

Question

Quizplus · Accepted Answer

Equilibrium in the market for bank reserves determines the federal funds rate, which is the interest rate at which depository institutions lend or borrow funds from each other overnight. When the supply of reserves matches the demand, the federal funds rate will settle at a level consistent with the monetary policy stance of the Federal Reserve.

Equilibrium in the Market for Bank Reserves Determines the