A commercial bank can receive a loan from another commercial bank in the Group of answer choicesFederal funds marketbank loan marketFed marketDiscount market
Question
A commercial bank can receive a loan from another commercial bank in the Group of answer choicesFederal funds marketbank loan marketFed marketDiscount market
Solution
A commercial bank can receive a loan from another commercial bank in the Federal funds market. This market allows banks that fall short of their reserve requirements to borrow funds from banks with excess reserves. This is typically a short-term arrangement, often overnight. The interest rate at which these loans are made is called the federal funds rate.
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