what does the "effective" federal funds rate mean?is this the real US interest rate or just the nominal?

Question

i am writing an essay and have a graph of the federal funds rate (effective).what exactly does this mean?the essay focuses on the effects of increasing interest rates.the monetary expansion which began after the dot.com bubble burst and the terrorist attacks,caused interest rates to fall and eventually output to increase back to its normal level.having studied diagrams it would appear that in the medium run the price should absorb the increase in nominal money and nominal interest rates should increase by the same proportion...and therefore be higher than they were before the expansion BUT with the same REAL interest rate due to the increase in price (i.e. inflation).i am hoping that the effective federal funds rate simply means the real interest rate so my graph and theories make sense

Answer 1

The daily effective federal funds rate is a volume-weighted average of rates on trades arranged by major brokers. The effective rate is calculated by the Federal Reserve Bank of New York using data provided by the brokers and is subject to revision.

Answer 2

there are a number of diverse costs of interest in an financial gadget and any of those costs of interest would be expressed in the two nomainl words or actual tems. costs of interest suggested in the corporate press or the costs of interest presented by utilising banks are nominal costs of interest, because of the fact they do no longer look to be adjusted for inflation. as a manner to precise a sort of nominal costs as a real cost only subtrat the cost of inflation from that nominal cost. as an occasion, in case you get a private loan to purchase a automobile at 8% interest and the cost of inflation is two%, then the actual interest cost which you pay on your individual loan 6%. The federal funds cost is the cost of interest that banks charge different banks to borrow reserves. the affordable cost is the cost of interest that the Fed costs banks to borrow reserves type the Fed.