Question

The Board of Governors is the policy making body at the FED and is responsible for setting the _______________ (rate of interest charged to commercial banks) and the reserve requirements (the amount of customer deposits which commercial banks must hold back and not loan out)..

Answer 1

Discount rate

Step-by-step explanation:

The discount rate, also known outside of the U.S. as the bank rate, is the interest rate that the Fed charges commercial banks, usually for short-term loans.

Commericial banks do not often borrow from the Fed, and when they do, it is usually to meet a short-term liquidity requirement.

It is also referred to as the discount window.