Asked by Colton Larson on May 19, 2024
Verified
Just after the terrorist attack on September 11, 2001, the Fed stood ready to lend financial institutions funds. When the Fed did this, it was acting in its role of lender of last resort.
Lender of Last Resort
An institution, usually a country's central bank, that offers loans to banks or other eligible institutions that are experiencing financial difficulty or are deemed at risk of failure.
Financial Institutions
Financial Institutions are organizations such as banks, credit unions, and insurance companies that provide a wide range of financial services including deposits, loans, investments, and currency exchange.
- Examine the influence and purpose of monetary policy in economic circumstances, including during crisis situations.
- Recognize the importance of stable banking systems and the Federal Reserve's role in maintaining this stability.
Verified Answer
RS
Rogelio SanchezMay 21, 2024
Final Answer :
True
Explanation :
The Federal Reserve acts as a lender of last resort to provide liquidity to financial institutions in times of crisis, such as after the September 11, 2001 terrorist attacks, to ensure the stability of the financial system.
Learning Objectives
- Examine the influence and purpose of monetary policy in economic circumstances, including during crisis situations.
- Recognize the importance of stable banking systems and the Federal Reserve's role in maintaining this stability.