The First Test of the Federal Reserve as Lender of Last

question 8

Multiple Choice

The first test of the Federal Reserve as lender of last resort occurred with the:

• A)Attack on Pearl Harbor by the Japanese
• B)Widespread failures of Savings and Loans in the 1980's
• C)Introduction of flexible exchange rates in the U.S.in 1971
• D)Stock market crash in 1929

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Definitions:

U.S. Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulating banks, maintaining financial stability, and providing banking services.

Bank of Japan

The central bank of Japan, responsible for issuing currency, implementing monetary policy, and maintaining the stability of the Japanese financial system.

Interest Rates

The cost of borrowing money or the return on savings, typically expressed as an annual percentage.

Monetary Policy

Actions taken by a central bank, currency board, or other regulatory authorities to control the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.