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WAEC Economics 2010 Question 39

Question 39

Financial Institutions

The function of the Central Bank as a lender of last resort means that when all other sources fail,

  1. A.the consumer can always borrow money from the Central Bank.
  2. B.the government can ask the Central Bank to print more money.
  3. C.commercial banks can raise loans from the Central Bank.
  4. D.commercial banks can deposit money with the Central Bank.
Show the answer and explanation

Answer: C (commercial banks can raise loans from the Central Bank.)

Explanation

As lender of last resort the central bank lends to commercial banks that cannot get funds elsewhere.