Question

The _____________ (the interest rate banks charge each other on overnight loans) is highly sensitive to money market factors and well exemplifies the interaction of supply and demand for banking funds..

Answer 1

Federal funds rate

Step-by-step explanation:

By law, banks are meant to have a reserve relative to a percentage of deposits but when the bank cannot meet its financial obligations, it borrows from the federal reserve.

The federal funds rate is the interest rate that a bank charges another bank or banks when it lend money to those banks from its reserves when it gives an overnight loan.

Cheers.