Which of the following statements is true of the federal funds market? A) No ban

Question

Which of the following statements is true of the federal funds market?

A) No banks are refused loans in the federal funds market.

B) In the federal funds market, banks with a shortage of reserves borrow funds, while banks with an excess of reserves lends them out.

C) The interbank lending system works more efficiently in periods of financial panic than in periods of financial stability.

D) Although the federal funds market aims to provide liquidity to needy banks, it is not very popular as overnight loans are logistically inefficient for large banks.

Explanation / Answer

In the federal funds market, banks with a shortage of reserves borrow funds, while banks with an excess of reserves lends them out.

the above is the answer

this results in proper liquidity in market.

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