The discount rate is the
A)banks' real interest rate.
B)interest rate at which the Fed will loan reserves to commercial banks.
C)interest rate banks charge the Fed when the Fed borrows from the banks.
D)name of the interest rate banks charge their most credit-worthy borrowers.
E)the interest rate paid on U.S. government securities.

Question

Quizplus · Accepted Answer

The discount rate is the interest rate at which commercial banks can borrow reserves from the Federal Reserve. It is set by the Federal Reserve and is used as a tool to influence monetary policy by either encouraging or discouraging banks from borrowing money.

The Discount Rate Is the