Changes in liquidity in the banking system affect ________.
A)the nominal interest rate
B)the real interest rate
C)the federal funds rate
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

Changes in liquidity in the banking system can influence the supply and demand for loanable funds. This shift in the supply and demand can affect the nominal and real interest rates, as well as the federal funds rate, which is the interest rate that banks use to lend and borrow from each other. Therefore, all of the given options are affected by the changes in liquidity in the banking system.

Changes in Liquidity in the Banking System Affect ________