1. What does "lender of last resort" mean? 2. Analyze why liquidity is such an important issue. 3. What is the difference between illiquid banks and insolvent banks? How does that difference affect the lender-of-last-resort role of central banks? 1 4. How does the lender of last resort help prevent bank runs? And by doing so, the chances of a broader financial panic? 5. Why might a bank run worsen if a bank has to sell assets in response to depositors' withdrawals? 1. How would long-term illiquid assets and short-term liquid liabilities contribute to conditions for a financial panic? 2. Why is a bank run so difficult to stop? 3. What is a financial panic and what can cause a financial panic? 4. Describe how a financial panic can lead to loss of income and employment in sectors of the economy seemingly unrelated to the financial sector