Which of the Following Statements Is True of the Federal

question 85

Multiple Choice

Which of the following statements is true of the federal funds market?

• A) No banks are refused loans in the federal funds market.
• B) In the federal funds market, banks with a shortage of reserves borrow funds, while banks with an excess of reserves lend them out.
• C) The interbank lending system works more efficiently in periods of financial panic than in periods of financial stability.
• D) Although the federal funds market aims to provide liquidity to needy banks, it is not very popular as overnight loans are logistically inefficient for large banks.

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