The creation of the Federal Reserve in 1913:
A) provided the opportunity for lender of last resort but not the guarantee that it would be used.
B) guaranteed the Federal Reserve would always act as lender of last resort.
C) eliminated bank panics in the U.S.
D) was in response to the Great Depression in the U.S.

Question

Quizplus · Accepted Answer

The creation of the Federal Reserve in 1913 provided the opportunity for it to act as a lender of last resort, but this did not guarantee that it would actually be used. Additionally, the Federal Reserve was not created in response to the Great Depression, as it took place over a decade later. Finally, while the Federal Reserve has played an important role in reducing the frequency and severity of bank panics, it has not completely eliminated them.

The Creation of the Federal Reserve in 1913