Central bank as lender of last resort

The central bank performs as lender of last resort. Explain how?

Answer: The central bank too acts as lender of last resort for other banks of the country. This means that when a commercial bank fails to obtain financial accommodation from anywhere, it approaches the central bank as last resort. The Central bank advances loan to such a bank against standard securities. As the lender of last resort, central bank exercises control over the whole banking system of country.

View Complete Question

Related Questions in Microeconomics

Q : Labor Unions and Aggregate Wage Income

Can someone help me in finding out the right answer from the given options. The least likely outcome when unions succeed in increasing their member’s wages is that: (i) Wages in non-union sectors will drop. (ii) Employment will grow in the non-union sectors. (ii

Q : Problem on I-Proprietorships The

The business owned and operated by the lone individual is a/an: (i) Unit of labor. (ii) Entrepreneurship. (iii) Corporation. (iv) Sole proprietorship. Can someone please help me in finding out the accurate answer from the above opt

Q : Impact of Monopoly in welfare Discuss

Discuss the impact of a monopoly on the welfare of the citizens of the country. In your discussion you should include policies that can be implemented by the government too reduce the abuse of dominant position in the market.

Q : Loss efficiency to society from

When the equilibrium price of wheat is $50 per ton and the marginal cost of the last ton of wheat generated is $70, there is: (w) an efficiency loss to society from over-production. (x) an efficiency loss to society from underproducti

Q : Substitution and elasticity of good The

The price elasticity of demand is probable to be greater the: (1) more extensively the good is seems as a need. (2) better the obtainable alternatives for producers. (3) higher the opportunity costs of production. (4) larger the number of utilizes for

Q : Profit Maximization-total revenue and

All profit-maximizing firms will hire much labor up to the point where: (i) Average physical product of the labor equals nominal wage. (ii) Last unit of the labor adds equally to net revenue and net cost. (iii) Marginal product of the labor is at its maximum value. (i

Q : Problem on least likely Inferior Goods

Chris ate Ramen Noodles or pinto beans for each and every meal whereas an impoverished college student. Chris graduated and landed a job beginning at a yearly salary of $50,000. Chris’s demands for the Ramen Noodles and pinto beans were most lik

Q : Problem on Open Shops Whenever a firm

Whenever a firm hires workers in spite of of whether the workers pay union dues, then this is: (i) A closed shop. (ii) A union shop. (iii) An agency shop. (iv) An open shop. (v) A scab shop. Choose the right answer from the above o

Q : Spending pattern in Substitution Effects

I have a problem in economics on spending pattern in Substitution Effects. Please help me in the following question. Even when your real income were held steady by adjusting for price modifications, your spending pattern would react to modifications in relative prices

Q : Financial Asset of Annual Income

Perpetuity is a: (w) life insurance policy which matures upon retirement. (x) nondepreciable piece of capital. (y) financial asset which pays its owner an annual income forever. (z) pyramid scheme as a chain letter.

Discover Q & A

Leading Solution Library

Avail More Than 1450904 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads

No hassle, Instant Access

Start Discovering

18,76,764

1949698
Asked

3,689

Active Tutors

1450904

Questions
Answered

Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

Submit Assignment