Question

31. Banks pay the _____________ rate when they borrow reserves from other banks. Banks pay the...

31. Banks pay the _____________ rate when they borrow reserves from other banks. Banks pay the ______________ rate when they borrow reserves from the Fed.

discount; federal funds

federal funds; prime

federal funds; discount

prime; discount

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Answer #1

Answer 31: Option C is correct. Banks pay the Federal fund rate when they borrow money from other bank. It means an interest rate charged by the one bank to another bank.

Banks pay the​the Discount rate when they borrow reserve from the fed. When Commercial bank borrow money from Central bank which lead to providing Discount rate.

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