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What does "lender of last resort" mean with respect to the Federal Reserve?

A. It has the power to decide how much money a bank can lend out.

B. It makes decisions about who a bank can lend money to.

C. (Student Selected Correct )It will lend money to a bank in a financial emergency.

D. It decides interest rates for interbank loans

User Hayha
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2 Answers

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Answer:

Explanation: Answer A

User Rawle
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Answer: The correct option is option C

Explanation: "Lender of last resort" means that the Federal Reserve has the authority to lend money to banks and other financial institutions during times of financial crisis or emergencies. This is done to help prevent a banking panic and to maintain the stability of the financial system. The Federal Reserve acts as a lender of last resort by providing short-term loans to banks that cannot obtain funding elsewhere. By doing so, the Federal Reserve helps to ensure that banks have the liquidity they need to continue lending and meet their financial obligations.

User Sean Ahrens
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