Which statement is the best explanation of how the Federal Reserve employs the discount rate? (1 point)

Question

• The discount rate is the reduced interest fee on overnight loans by commercial banks.
O Ta discount rate is the rate of interest the Fed charges on iS loans to commercial
• The discount rate is the federal funds rate on overnight loans to private businesses.
• The discount rate is the interest rate the Fed charges on mortgage loans to private Citizens

Answer 1

The best explanation of how the Federal Reserve employs the discount rate is:

• The discount rate is the rate of interest the Fed charges on loans to commercial banks.