Multiple choice

The lender of last resort means

  1. the govt. coming to the rescue of poor farmers

  2. the central bank coming to the rescue of other banks in financial crisis

  3. commercial banks in coming to the rescue of small industrial units

  4. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The lender of last resort is the central bank that provides emergency liquidity to commercial banks facing financial crises or temporary liquidity shortages. This prevents bank failures and maintains financial stability. It does not refer to government aid to farmers or commercial bank lending.

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