The Fed can directly protect a bank during a bank run by
A)increasing reserve requirements.
B)selling government bonds to the bank.
C)lending reserves to the bank.
D)Doing any of the above.

Question

Quizplus · Accepted Answer

The Fed can protect a bank during a bank run by lending reserves to the bank. This provides the bank with the necessary liquidity to meet the withdrawals of their depositors and avoid insolvency. Increasing reserve requirements and selling government bonds to the bank do not directly provide the bank with necessary funds to address a bank run.

The Fed Can Directly Protect a Bank During a Bank