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Question 135/145
Which of the following would a bank resort to as a "lender of last resort" in the event of an extreme liquidity crisis?
Correct Answer: B
In the event of an extreme liquidity crisis, a bank would resort to the "discount window" as a lender of last resort. This facility is provided by central banks (like the Federal Reserve) to offer loans to banks facing liquidity shortages, thereby stabilizing the financial system.
ReferencesStandard financial practice and the role of central banks in providing emergency liquidity.
ReferencesStandard financial practice and the role of central banks in providing emergency liquidity.
- Question List (145q)
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