Central banks have two essential functions:
A) managing the money supply and acting as a lender of last resort.
B) creating full employment and acting as a lender of last resort.
C) regulating financial markets and creating full employment.
D) regulating financial markets and collecting taxes.

Question

Quizplus · Accepted Answer

Central banks are responsible for managing the money supply, which involves controlling interest rates, regulating the banking system, and stabilizing financial markets. They also act as a lender of last resort, providing emergency liquidity to banks and other financial institutions when needed. These two functions are essential to maintaining a stable and healthy economy. The other choices, regulating financial markets and creating full employment or collecting taxes, are not primary functions of central banks.

Central Banks Have Two Essential Functions