When the Central Bank Acts as a Lender of Last

question 45

Multiple Choice

When the central bank acts as a lender of last resort, it:

• A)requires the borrower to put up collateral.
• B)is able to confiscate some of the borrower's assets.
• C)requires voting rights of the borrower's board of directors.
• D)nationalizes the borrower.

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Definitions:

Checks and Balances

A system in democratic governments designed to prevent any one branch from gaining excessive power by providing each branch with the authority to check the actions of the others.

Judicial Branch

The branch of government responsible for interpreting the law and administering justice through courts and other judicial institutions.

Constitutional

Related to, governed by, or in accordance with a constitution, which is the fundamental principles or established precedents guiding a state or organization.

Constitutions

Legal documents or sets of principles that outline the fundamental laws governing a country or other organization, specifying how the entity is to be governed and defining the rights of its citizens or members.