Q457
Interest rate at which federal funds are borrowed and can be lent is classified as
A.
borrowing rate
B.
supplying rate
C.
lending rate
D.
federal funds rate
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
Interest rate at which federal funds are borrowed and can be lent is classified as federal funds rate. The federal funds rate refers to the interest rate that banks charge other banks for lending them money from their reserve balances on an overnight basis. By law, banks must maintain a reserve equal to a certain percentage of their deposits in an account at a Federal Reserve bank.