The interest rate on loans made by banks in the market in which they lend and borrow reserves from ...

The interest rate on loans made by banks in the market in which they lend and borrow reserves from each other for very short periods of time is known as the:
 a. discount rate.
  b. legal reserve rate.
  c. federal funds rate.
  d. open market rate.
  e. margin rate.

QUESTION 2

The federal funds rate is the interest rate charged by:
 a. banks for loans to other banks.
  b. the Fed for overnight loans.
  c. the Fed for borrowed reserves.
  d. the federal government on loans to member banks.

QUESTION 3

The interest rate in the federal funds market:
 a. is determined by the imposition of price controls imposed by the Fed.
  b. rises when the quantity of funds demanded by banks seeking additional reserves exceeds the quantity supplied by banks with excess reserves.
  c. will fall if the Fed sells bonds and, thereby, reduces the reserves available to banks.
  d. is an interest rate that is largely unaffected by the policies of the Fed.

QUESTION 4

The federal funds market is the market where:
 a. the federal government raises funds to cover its budget deficit.
  b. the Federal Reserve System makes loans to commercial banks.
  c. commercial banks with excess reserves make loans to commercial banks seeking reserves.
  d. commercial banks make loans to the Federal Reserve.

QUESTION 5

When the discount rate rises, the cost:
 a. of loans to bankers, best customers goes up.
  b. of loans between banks rises.
  c. of international loans rises.
  d. to savings and loans of borrowing money from the public falls.
  e. to banks of borrowing from the Fed falls.

QUESTION 6

When the discount rates fall, the cost:
 a. of loans to bankers' best customers goes down.
  b. of loans between banks falls.
  c. of international loans falls.
  d. to banks of borrowing from the Fed falls.
  e. to savings and loans of borrowing money from the public falls.

QUESTION 7

When the Fed lowers the discount rate, it:
 a. lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public.
  b. raises the cost of borrowing from the Fed, discouraging banks from making loans to the general public.
  c. increases the amount of excess reserves that banks hold, encouraging them to make loans to the general public.
  d. increases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.
  e. decreases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.

QUESTION 8

The rate of interest charged by the Federal Reserve to member banks for reserves borrowed from the Fed is known as the:
 a. federal funds rate.
  b. discount rate.
  c. repurchase rate.
  d. Q-ceiling rate.