In the Event of a Sudden Loss in Confidence in the Ability

question 39

Multiple Choice

In the event of a sudden loss in confidence in the ability of the commercial banks to redeem deposits,the Bank of Canada would probably

• A)take over the operation of any banks in severe difficulties.
• B)lend reserves to the commercial banks.
• C)offer to sell government bonds to the chartered banks.
• D)suspend operation of the banking system until the panic subsided.
• E)impose severe financial penalties on the commercial banks by charging them interest at higher than the Bank rate.

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Definitions:

Orbital Frontal Cortex

A region of the brain located in the frontal lobes that is involved in the complex process of decision making and moderating social behavior.

Ventromedial Cortex

A region of the brain associated with decision-making, emotional responses, and the processing of reward and fear.

Anterior Cingulate Cortex

A region of the brain involved in functions such as decision-making, emotion, and impulse control.

Lateral Hypothalamus

A region of the hypothalamus involved in regulating hunger and thirst.