Assume that the RBA has a cash rate target of 2%. Which of the following statement is TRUE about the market for exchange settlement account funds?
a. A bank with a surplus of funds in their exchange settlement account would be willing and able to lend to another bank who needs funds at an interest rate of 1.7%.
b. None of the other answers are correct.
c. A bank that expects their exchange settlement account will go into deficit will borrow from another bank at an interest rate of 2.3%.
d. The RBA will lend to banks at an interest rate of 1.75%.
e. The RBA will pay banks an interest rate of 2.25% on the funds in their exchange settlement accounts.