The Fed can directly protect a bank during a bank run by
A)increasing reserve requirements.
B)selling government bonds to the bank.
C)lending reserves to the bank.
D)doing any of the above.

Question

Quizplus · Accepted Answer

The Fed can directly protect a bank during a bank run by lending reserves to the bank. This helps the bank to meet the demands of its depositors and prevents it from becoming insolvent. Increasing reserve requirements or selling government bonds to the bank may also help in the long run, but they do not provide immediate liquidity support to the bank during a bank run.

The Fed Can Directly Protect a Bank During a Bank