Which of the following statements is false?
A) The federal funds rate is the interest rate at which a bank lends funds to another bank.
B) The federal funds rate is determined by the open market.
C) The federal funds rate is established on a semiannual basis by the board of governors of the Federal Reserve.
D) The discount rate is different from the federal funds rate.
E) The discount rate is the interest rate paid by a member bank to borrow funds from the Fed.

Question

Quizplus · Accepted Answer

The federal funds rate is not established on a semiannual basis by the board of governors of the Federal Reserve. Rather, it is determined by the open market and can be adjusted by the Federal Reserve based on the state of the economy. A, B, D, and E are all true statements about the federal funds rate and the discount rate.

Which of the Following Statements Is False