Question

The ______ is the interest rate commercial banks pay to the Fed; the ______ is the interest rate commercial banks charge each other for short-term loans.

A. federal funds rate; discount rate
B. discount rate; federal funds rate
C. nominal interest rate; real interest rate
D. nominal interest rate; prime rate of interest

Answer 1

B. discount rate; federal funds rate

Step-by-step explanation:

the federal discount rate is the amount the federal reserve charge their members for borrow enough to maintain their required reserve.

While the federal funds rate is the interest on loan between bank or credit unions for short-term loan between themselve, for a day. This are called overnight loans. Must be repaid both, principal and interest at the next day.