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Q: Is the preferential cup the interest that the federal reserve charges the bank member when they ask for a loan?
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What is the rate of interest the Federal Reserve Bank charges member banks called?

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If the federal reserve buys a treasury bond from a bank what will be the effect on interest rate the bank charges its customers for a loan?

The interest rates will decrease since there are more available funds for the bank to loan.


What will be the effect on the interest rate the bank charges its customers for a loan if the bank buys a Treasury Bond from the Federal Reserve?

The interest rate will increase since there are fewer available funds for the bank to loan.


What causes the Federal Reserve System to earn money?

Earnings of the Federal Reserve System are primarilyderived from the interest the Federal Reserve Banks receive from their holdings of securities acquired from their open market operations along with interest from loans made to member banks.