The federal funds rate is:
a. the minimum amount of reserves the Fed requires a bank to hold.
b. the interest rate that the Fed charges banks who borrow from it.
c. the interest rate on loans made by banks to other banks
d. the maximum percentage of the cost of a stock that can be borrowed from a bank, with the stock offered as collateral.
e. an appeal by the Fed to banks, asking for voluntary compliance with the Fed's wishes.
Question 2
The federal funds market is the market in which:
a. banks borrow from the Fed.
b. bank customers borrow from their banks
c. banks borrow from each other.
d. the federal government borrows from the Fed.
e. the federal government borrows from members of the general public.
When the United States gets stuck over a controversial issue—usually something a divided Congress ca
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