Which of the following is true of the function of the lender of last resort?
a. Large commercial banks provide loans at low rates of interest to small banks when the small banks are unable to meet the demands of the depositors.
b. The central bank reduces the discount rate to facilitate borrowing by commercial banks from the central bank.
c. Commercial banks provide loans to customers with bad credit ratings who are unable to get loans from any other sources.
d. The central bank reinforces the effect of deposit insurance and reassures bank customers that they will not lose their money.
d
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A strategy which is universally best, regardless of the strategy chosen by others, is called a
A) Nash strategy. B) dominant strategy. C) mutually interdependent strategy. D) zero-sum strategy.
If government increased Social Security benefits and decreased the salaries of government workers by the same amount, which of the following is the expected immediate effect? a. An increase in the budget deficit and government purchases of goods and services
b. An increase in the budget deficit, but no change in government purchases of goods and services. c. An increase in the budget deficit and a decrease in government purchases of goods and services. d. No change in the budget deficit because there has been no change in government purchases of goods and services. e. No change in the budget deficit because government purchases of goods and services have decreased by the same amount as transfer payments have increased.