How can the Bank of Canada directly protect a bank during a bank run?
A)by increasing reserve requirements
B)by selling government bonds to the bank
C)by lending reserves to the bank
D)by penalizing the bank in trouble

Question

Quizplus · Accepted Answer

The Bank of Canada can directly protect a bank during a bank run by lending reserves to the bank. This can provide the bank with the necessary liquidity to meet the demands of depositors and prevent a run from progressing further. Increasing reserve requirements, selling government bonds to the bank, or penalizing the bank in trouble may not be as effective in directly protecting the bank during a bank run.

How Can the Bank of Canada Directly Protect a Bank