Which of the Following Is Correct Regarding the Discount Rate

question 24

Multiple Choice

Which of the following is correct regarding the discount rate and the federal funds rate?

• A) The discount rate is a market equilibrium rate, and the federal funds rate is fixed and unchanging.
• B) The discount rate is a reduction in interest rates that is available to preferred bank borrowers, and the federal funds rate is the rate that the national government pays to borrow from the central bank.
• C) The discount rate is the interest rate that banks pay to borrow from the central bank, and the federal funds rate is the rate that banks pay to borrow one another's excess reserves.
• D) The discount rate is the interest rate that banks pay to borrow from each other, and the federal funds rate is the rate that they pay to borrow from the central bank.

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Definitions:

Diameter

A straight line passing from side to side through the center of a body or figure, especially a circle or sphere, representing the longest distance across it.

Friction Ridges

The raised portions of the epidermis on the fingers and thumbs, palms, soles, and toes, creating distinctive patterns used for identification in forensic analysis.

Reticular Layer

The deeper layer of the dermis in the skin, consisting of dense irregular connective tissue that provides strength and elasticity.

Epidermis

The outermost layer of skin, consisting of dead and living cells, that protects underlying tissues.