When the State Bank of Pakistan provides emergency funds to a solvent commercial bank facing a temporary liquidity shortage, it is acting as the:
Correct answer: A. Lender of last resort
- A. Lender of last resort
- B. Collector of federal taxes
- C. Manager of public development schemes
- D. Regulator of international trade
Explanation
A central bank acts as lender of last resort by supplying liquidity to banks that cannot obtain sufficient short-term funds elsewhere. This function supports financial stability and differs from tax collection or trade regulation.
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About Economy of Pakistan
Pakistan's economy is examined through agriculture, industry, services, trade, remittances, employment, population, poverty and regional development. The topic also covers GDP and national income, inflation, fiscal and monetary policy, taxation, public debt, the balance of payments, energy constraints and structural challenges, including the role of the State Bank and development planning.
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Economics is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
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