Final answer:
The International Monetary Fund (IMF) is known as the lender of last resort to nations, providing crucial financial support during severe economic crises. Central banks also serve this role within their own economies, offering emergency aid to banks and institutions to ensure financial stability.
Step-by-step explanation:
The institution best known as a lender of last resort to nations in financial trouble is the International Monetary Fund (IMF). This intergovernmental organization steps in to provide support to countries that have exhausted all other options for funding.
In the role of a lender of last resort, the IMF offers aid during severe economic crises, ensuring stability in the global economy.Central banks also act as lenders of last resort within their respective countries, providing emergency loans to banks and financial institutions to prevent bank runs and systemic financial collapse.
Quantitative easing during the 2008-2009 recession, for example, is a demonstration of the Federal Reserve's commitment to providing short-term credit as needed to maintain the functioning of the financial system.