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The federal funds rate is the _________.(A) interest on deposits that private banks hold on reserve at the Federal Reserve.(B) interest rate on loans between private banks.(C) interest for loans from the Federal Reserve to private banks.(D) income generated by the Federal Reserve through discount loans.(E) mandatory portion of bank deposits that are set aside and not loaned out.

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Answer:

(C) interest for loans from the Federal Reserve to private banks.

Explanation:

The federal fund is an interest rate at which the depository institute lends reserve balance to the other depository institutions on an unconsolidated basis and reserve balances are held at the federal reserves to amount the depository institutions.

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