Question

The Credit Anstalt bank in Austria became insolvent in May 1931 when the Austrian Government refused to play the role of Lender of Last Resort.

a. true
b. false

Answer 1

The Credit Anstalt bank in Austria became insolvent in May 1931 when the Austrian Government refused to play the role of Lender of Last Resort.

Step-by-step explanation:

In May 1931, the Credit Anstalt bank in Austria became insolvent when the Austrian Government refused to play the role of Lender of Last Resort.

The Lender of Last Resort is a term used to describe the central bank's role in providing funds to banks and financial institutions when they cannot obtain funds from anywhere else. By acting as a lender of last resort, the central bank helps prevent bank runs and the spread of financial instability.

In this case, the Austrian Government's refusal to play the role of Lender of Last Resort contributed to the insolvency of the Credit Anstalt bank.