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Questions and Answers
What is the role of a lender of last resort?
What is the role of a lender of last resort?
- To limit the funds available to struggling banks
- To invest in struggling banks for profit
- To offer loans to banks experiencing financial difficulty (correct)
- To encourage customers to withdraw funds from struggling banks
Why do commercial banks usually try not to borrow from the lender of last resort?
Why do commercial banks usually try not to borrow from the lender of last resort?
- It encourages customer confidence in the bank
- It helps in profit maximization for the banks
- It indicates the bank is experiencing a financial crisis (correct)
- It is a requirement by the central bank
What is the purpose of the lender of last resort in preventing bank runs?
What is the purpose of the lender of last resort in preventing bank runs?
- To invest in struggling banks to boost their profits
- To limit the liquidity of all banks
- To encourage panic withdrawals from struggling banks
- To protect individuals who have deposited funds and prevent panic withdrawals (correct)
Which component of monetary economics concerns the proper definition of money and its demand and supply?
Which component of monetary economics concerns the proper definition of money and its demand and supply?
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What term describes non-cash assets that are highly liquid, such as savings accounts and Treasury Bills?
What term describes non-cash assets that are highly liquid, such as savings accounts and Treasury Bills?
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What is the primary concern of monetary macroeconomics?
What is the primary concern of monetary macroeconomics?
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In a modern monetary economy, against what are virtually all exchanges of commodities among economic agents made?
In a modern monetary economy, against what are virtually all exchanges of commodities among economic agents made?
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Who is usually responsible for the formulation of monetary policy in a monetary economy?
Who is usually responsible for the formulation of monetary policy in a monetary economy?
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