Which statement is true?

Question

Quizplus · Accepted Answer

The Federal funds target rate, the discount rate, and the prime rate generally rise and fall together. This means that if one rate increases, the others are likely to increase as well, and if one rate decreases, the others are likely to decrease as well. Option A is incorrect because the prime rate and the discount rate tend to move in the same direction as they are both set by banks. Option B is incorrect because the Fed raised the rates to combat inflation, not to counter a slowdown. Option D is incorrect because the discount rate is typically set lower than the prime rate.

Which Statement Is True