The federal funds rate is the rate that banks regulated by the Federal Reserve charge each other for overnight loans. The federal funds rate is set by the Fed as its principal tool of Monetary Policy, and it becomes the “wholesale cost of money” for commercial banks. In 2020, due to the Pandemic Recession, the Federal Reserve reduced the funds rate to 0-.25%. This essentially means that commercial banks can borrow in the short-term money markets at 0% to .25%. It therefore causes savings rates offered by the commercial banks to be about the same. Commercial banks then will pay their depositors the same interest that other banks will charge them to borrow money.
Introduction
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Your First Big Job: How to Get It
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Flourishing in Your Job and Well-Being in Your Life
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The Importance of Behavioral Economics
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What is Money?
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Analyzing Your Current Financial Situation
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Budgets and Saving
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Credit Cards, Auto Loans, and Other Personal Debt
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Student Loans
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Understanding the Time Value of Money
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Banks and Financial Institutions
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Buying a Home
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Insurance: What Do You Need?
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Investing Fundamentals
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Investing in Mutual Funds
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Saving for Retirement
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Fiscal Policy and Monetary Policy-Government Intervention in Your Life
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