Consider the interaction between a goldsmith and a nascent central bank.The central bank's decision to institute a lender-of-the-last-resort facility
A) represents an additional source of liquidity for the goldsmith.
B) increases the goldsmith's incentives to hold non-earning central bank deposits.
C) at the extreme, transfer all of the goldsmith's withdrawal risk to the central bank.
D) all of the above
E) a and c
Correct Answer:
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