Compare and contrast the federal funds rate, the discount rate, and the prime rate.(4 points) explain in 3 sentences

Answer 1

The Federal Funds rate is the interest rate at which depository institutions lend to other depository institutions overnight. It is determined by the Federal Reserve and is used as a tool to manage monetary policy and control inflation. The Discount rate is the interest rate at which the Federal Reserve lends to commercial banks and acts as a safety net for banks facing liquidity issues. Lastly, the Prime rate is the interest rate that commercial banks offer to their most creditworthy customers. It serves as a benchmark for many short-term consumer loan rates and can influence other interest rates in the economy.