The Federal Reserve uses the _____ to fulfill its function as lender of last resort.
A)bonds markets
B)market for overnight loans
C)discount window
D)stock market

Question

Quizplus · Accepted Answer

The discount window is a facility provided by the Federal Reserve where banks and other depository institutions can borrow funds overnight at a discount rate, which is typically higher than the federal funds rate. This facility is used by the Federal Reserve to fulfill its function as lender of last resort, which means that it provides liquidity to banks that are facing temporary difficulties in obtaining funding from other sources. The Fed uses the discount window to prevent bank runs and other systemic crises that can destabilize the financial system. The bond markets, stock market, and market for overnight loans are not directly used by the Federal Reserve to fulfill its lender of last resort function.

The Federal Reserve Uses the _____ to Fulfill Its Function