The discount rate is the interest rate that
A)commercial banks charge their customers.
B)commercial banks charge each other for the loan of reserves.
C)the Fed charges the government for loans.
D)the Fed charges commercial banks when it loans reserves to the banks.
E)the Fed pays commercial banks on their reserves held at the Fed.

Question

Quizplus · Accepted Answer

The discount rate is the interest rate charged by the Federal Reserve to commercial banks when the banks borrow funds from the Fed.

The Discount Rate Is the Interest Rate That