The Fed's Influence

Adjustments to the Federal Funds Rate influences a number of which borrowing costs.

• interest rates on loans
• mortgage insurance premiums
• credit card rewards
• savings account fees

The Fed meets every (a)   weeks.

One of the Fed's main goals is to ensure (a)   prices.

What is the Federal Funds Rate?

• The Federal Funds Rate is the interest rate for overnight loans between banks.
• The Federal Funds Rate is the interest rate for long-term government bonds.
• The Federal Funds Rate is the interest rate banks charge their customers for savings accounts.
• The Federal Funds Rate is the interest rate set by the Federal Reserve for consumer loans.

When the Fed drops interest rates, what are they really dropping?

• The discount rate.
• The federal funds rate.
• The prime rate.
• The mortgage rate.

How do interest rates affect demand and inflation?

• Interest rates affect demand by influencing borrowing costs, which in turn impacts inflation.
• Lower interest rates lead to increased savings and reduced spending.
• Higher interest rates always decrease inflation regardless of demand.
• Interest rates have no effect on demand or inflation.