The function of the Central Bank as the lender of last resort means that when all other sources fail,
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Correct Answer: Option C
Explanation:
Central banks act as lenders of last resorts to commercial banks by lending them funds so as to stay afloat when the need arises. If banks get into liquidity shortages (run out of money), then the Central Bank is able to lend the commercial bank sufficient funds to avoid the bank running out of funds.
If a bank ran out of money, people would lose confidence and want to withdraw their money from the bank. The central steps in by lending these banks money so as they can remain in business.
Central banks act as lenders of last resorts to commercial banks by lending them funds so as to stay afloat when the need arises. If banks get into liquidity shortages (run out of money), then the Central Bank is able to lend the commercial bank sufficient funds to avoid the bank running out of funds.
If a bank ran out of money, people would lose confidence and want to withdraw their money from the bank. The central steps in by lending these banks money so as they can remain in business.