The federal funds rate is ________.
A)a real interest rate
B)set periodically by Congress
C)a nominal interest rate
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The federal funds rate is a nominal interest rate set by the Federal Reserve, not Congress. It is the interest rate that banks charge each other for overnight borrowing and is used to influence other interest rates, such as mortgage rates or credit card rates. It is not a real interest rate because it does not take inflation into account.

The Federal Funds Rate Is ________