Question

The Fed can directly protect a bank during a bank run by Group of answer choices...

The Fed can directly protect a bank during a bank run by

Group of answer choices

increasing reserve requirements

lending reserves to the bank

doing any of the above

selling government bonds to the bank.

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Answer #1

Correct Answer:

B

Explanation:

Bank run is a phenomenon that involves many customers come to the banks and withdraw funds. It causes banks to be devoid of reserves. In this scenario, Fed can help the bank by lending reserves to the banks so that deposit withdrawal demand is honored by the banks. It is the way, Fed can help and protect banks.

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