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The rate of interest banks charge on short-term loans to their best customers is the _____.

required reserve ration (RRR)

federal funds rate

prime rate

money multiplier formula

2 Answers

5 votes

Answer: it’s prime rate

Explanation: i just took the quiz :)

User Jibysthomas
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Answer: Prime rate

Step-by-step explanation:

Prime rate is the rate of interest charged by the commercial banks to their creditworthy customers for short term loans. These customers are usually big corporations involved in business. RRR is the required reserved ratio which the deposits that banks must keep in hand.

Federal funds rate is the charges that banks impose on other banks for borrowing. Federal fund rate is used in the calculation of the prime rate. Money multiplier formula means the bank uses to calculate the new money inflow through demand deposits.

User Deolinda
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