The rate of interest that the fed reserve (fed) pays commercial banks on their deposits with the fed is rate on reserves.
What is meant be rate of interest?
In accounting rate of interest refers the proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.
Here we need to find the rate of interest that the fed reserve (fed) pays commercial banks on their deposits with the fed.
Here we know that, the rate of interest is the one that influence borrowing costs and spending decisions of households and businesses.
Therefore, the rate on the reserve implies the interest rate of fed reserve.
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