Question

Why is the Fed often referred to as a “lender of last resort,” or the last lender to turn to in a crisis? It lends consumers money when other banks will not. It keeps all failing banks afloat to avoid economic disruption. It helps finance and stabilize central banks internationally. It offers banks financial protection to keep consumers from panicking.

Answer 1

d. It offers banks financial protection to keep consumers from panicking.

Answer 2

The correct answer for above statement is:

It offers banks financial protection to keep consumers from panicking.

Explanation:

A lender of last resort is the organization in a business system that serves as the provider of liquidity to a business company which finds itself incapable to achieve enough liquidity in the interbank lending market and other facilities or sources have been consumed.