Under Which Condition Would the Fed Be Most Likely to Engage

question 77

Multiple Choice

Under which condition would the Fed be most likely to engage in its role as the lender of last resort?

• A) when throngs of borrowers apply for loans as the housing market picks up
• B) when a stock market crash causes people to sell their stocks and purchase bank CDs instead
• C) if a lack of confidence in the financial system causes savers to withdraw money from banks
• D) when record amounts of student loans are paid back before interest rates rise

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Definitions:

Compact Discs

Optical discs used to store music, videos, or data, once a predominant format for digital audio recording and playback.

Baskets

Containers typically made of woven strands of material used for storing or carrying items; metaphorically, it refers to groups or collections of items.

Domestically

Pertaining to or within a specific country's borders, often in contrast to international or foreign.

Trade

The act of buying, selling, or exchanging goods and services between parties within an economy or between economies.