A bank allows us to diversify risk because it has a:
A. small amount of borrowers and savers, so it can connect the optimal saver to the best-matched borrower.
B. big pool of borrowers and savers, so the risk of repayment is spread among many.
C. big pool of borrowers, but not many savers, so it can choose the riskiest person to borrow from.
D. small amount of borrowers, but many savers, so it can combine savings to make larger loans.
Answer: B
You might also like to view...
According to new growth theory, as technology becomes more important to growth, so does
A) increasing taxes. B) human capital. C) military spending. D) increasing trade barriers.
The "V" in the equation of exchange MsV = PY refers to
A) the velocity of inflation. B) a variable. C) income velocity of money. D) a vector that links P to Y.
Which of the following is true? a. Voluntary trades give both parties more in value than what they give up
b. Without the ability to trade, people would not tend to specialize as much in those areas where they had a comparative advantage. c. People can gain by specializing in the production of the good in which they have a comparative advantage. d. All of the above are true.
If P = 12, V = 6, and M = 1,000, then GDP is
A. 1,000. B. 2,000. C. 3,000. D. 500.