Question

Which of the following is the interest rate charged by the Federal Reserve to commercial banks?

1) Fluctuating rate
2) Opportunity cost
3) Discount rate
4) Prime rate
5) Rate of return

Answer 1

The Federal Reserve charges commercial banks the 3) discount rate.

Step-by-step explanation:

The interest rate charged by the Federal Reserve to commercial banks is the discount rate. The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility. The Federal Reserve offers three discount window programs, each with its own interest rate: primary credit, secondary credit, and seasonal credit. All discount window loans are fully secured.