The first test of the Federal Reserve as lender of last resort occurred with the:
A) attack on Pearl Harbor by the Japanese.
B) widespread failures of Savings and Loans in the 1980's.
C) introduction of flexible exchange rates in the U.S. in 1971.
D) stock market crash in 1929.

Question

Quizplus · Accepted Answer

The first test of the Federal Reserve as lender of last resort occurred with the stock market crash in 1929. This event led to widespread bank failures and a severe economic downturn, prompting the Federal Reserve to use its powers as lender of last resort to provide liquidity to the financial system and stabilize the economy.

The First Test of the Federal Reserve as Lender of Last