Give reasons or explain. 2. Central Bank acts as a lender of the last resort.

Give reasons or explain.

2. Central Bank acts as a lender of the last resort.

Answer: 

2. The Central Bank acts as the lender of last resort for the commercial banks and the government. When a commercial bank faces financial crisis and fails to obtain funds from other sources, the Central Bank plays the vital role of 'lender of last resort' and provides them with financial assistance in the form of credit.

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