A good example of using the discount rate to serve the lender of last resort role for the financial system occurred during the
A) savings and loan crisis of the 1980s.
B) stock market crash of 1987.
C) sharp rise in government deficits during the 1980s.
D) developing-country debt crisis of the 1980s.

Question

Quizplus · Accepted Answer

The stock market crash of 1987 is a notable example where the discount rate was used to serve the lender of last resort role for the financial system. The Federal Reserve lowered the discount rate to provide liquidity to the banking system, helping to stabilize financial markets after the crash.

A Good Example of Using the Discount Rate to Serve