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Define Or Explain the Concept of Lender of the Last Resort . - Economics

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Question

Define or explain the concept of Lender of the last resort .

Solution

The Central Bank acts as the lender of last resort for the commercial banks and the government. When a commercial bank faces financial crisis and fails to obtain funds from other sources, the Central Bank plays the vital role of ‘lender of last resort’ and provides them with financial assistance in the form of credit.

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 2012-2013 (March) (with solutions)
Question 2.1.7 | 2.00 marks
 2009-2010 (March) (with solutions)
Question 2.1.7 | 2.00 marks
Solution Define Or Explain the Concept of Lender of the Last Resort . Concept: Definition - Central Bank.
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