Federal Funds Rate: It is the rate at which any depository institution provided the reserve loans to some other depository institution without any collateral. Marginal Lending Facility Rate: It is the rate below which any bank is not allowed to lend. It is a kind of benchmark which is set by the central bank for the bank rate reference. Fixed exchange rate: this is an exchange rate system under which there is an intervention by the government to control the fluctuation and this is known as fixed exchange rate. Nominal exchange rate: the rate at which currencies are exchanged in the exchange market is known as the nominal exchange rate. Flexible exchange rate: this is an exchange rate system under which there is no intervention by the government, rather the rate is determined by the demand and supply phenomenon.

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Chapter 18, Problem 8P

To determine

Federal Funds Rate:

It is the rate at which any depository institution provided the reserve loans to some other depository institution without any collateral.

Marginal Lending Facility Rate: It is the rate below which any bank is not allowed to lend. It is a kind of benchmark which is set by the central bank for the bank rate reference.

Fixed exchange rate: this is an exchange rate system under which there is an intervention by the government to control the fluctuation and this is known as fixed exchange rate.

Nominal exchange rate: the rate at which currencies are exchanged in the exchange market is known as the nominal exchange rate.

Flexible exchange rate: this is an exchange rate system under which there is no intervention by the government, rather the rate is determined by the demand and supply phenomenon.

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