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    Question

    The rate of interest paid when one bank borrows reserves

    from another bank is called the:
    A bank discount rate Correct Answer Incorrect Answer
    B interbank offered rate Correct Answer Incorrect Answer
    C bank reserve rate Correct Answer Incorrect Answer
    D federal funds rate Correct Answer Incorrect Answer
    E Prime lending rate Correct Answer Incorrect Answer

    Solution

    The interest rate when one bank borrows reserves from another bank, especially overnight, is known as the interbank lending rate, often specifically called the federal funds rate in the U.S

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