Asked by Morris Mwendwa on Jun 09, 2024
Verified
Statement I: The Check Clearing for the 21st Century Act passed by Congress in 2004 with the intent to hasten the adoption of electronic check processing.
Statement II: The Fed performed its lender of last resort duty during the last major emergency after the terrorist attacks of 9/11 by lending over $45 billion to banks and thus avoiding a financial panic.
A) Statement I is true and statement II is false.
B) Statement II is true and statement I is false.
C) Both statements are true.
D) Both statements are false.
Check Clearing
is the process by which banks settle transactions involving checks, ensuring that the amount specified is transferred from the bank on which the check is drawn to the bank of the depositor.
Lender of Last Resort
A function usually performed by a central bank to provide funds to financial institutions facing liquidity problems to prevent their failure and systemic risks to the economy.
- Acquire knowledge of the mechanisms and aims of the Federal Reserve System.
- Analyze the critical function of the Federal Reserve acting as the lender of last resort.
Verified Answer
GH
Gulltabbsum HussainJun 14, 2024
Final Answer :
C
Explanation :
Statement I is true, as the Check Clearing for the 21st Century Act did aim to speed up the adoption of electronic check processing. Statement II is also true, as the Fed did perform its lender of last resort duty during the aftermath of 9/11 by lending over $45 billion to banks, which helped prevent a financial panic.
Learning Objectives
- Acquire knowledge of the mechanisms and aims of the Federal Reserve System.
- Analyze the critical function of the Federal Reserve acting as the lender of last resort.