The federal funds rate is the
A)percentage of face value that the Federal Reserve is willing to pay for Treasury Securities.
B)percentage of deposits that banks must hold as reserves.
C)interest rate at which the Federal Reserve makes short-term loans to banks.
D)interest rate at which banks lend reserves to each other overnight.

Question

Quizplus · Accepted Answer

The federal funds rate is the interest rate at which banks lend reserves to each other overnight. This rate is crucial in the monetary policy framework and influences other interest rates across the economy.

The Federal Funds Rate Is the