The Federal Reserve's lender-of-last-resort function means that it:
A)lends to financial institutions when they are having trouble getting loans.
B)buys long-term bonds in an effort to lower long-term interest rates.
C)borrows from financial institutions even when the general public has reduced borrowing.
D)oversees lending regulations in commercial banks.

Question

Quizplus · Accepted Answer

The lender-of-last-resort function of the Federal Reserve means that it provides loans, usually in times of financial crisis, to financial institutions that are having trouble getting loans from other sources. This is done to prevent a systemic collapse of the financial system. Options B, C, and D do not accurately describe the lender-of-last-resort function of the Federal Reserve.

The Federal Reserve's Lender-Of-Last-Resort Function Means That It