By Acting as a Lender of Last Resort, the Central

question 184

Multiple Choice

By acting as a lender of last resort, the central bank:

• A)prevents a loss of confidence in banks and avoids bank runs.
• B)keeps interest rates high so that spending increases.
• C)increases the amount of reserves that a bank is required to hold.
• D)may keep inflation low but will likely drive unemployment up.

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Definitions:

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns to verify that the total debits equal total credits.

Compound Journal Entry

A compound journal entry is an accounting entry which involves more than two accounts, recording multiple debits and/or credits in a single transaction.

Affects

Influences or changes caused by one factor on another within a business or system.

Accounts

Records within financial accounting that are used to keep track of increases or decreases in specific financial components, like assets, liabilities, equity, revenue, and expenses.