Financial intermediaries handle a larger flow of funds than do primary markets primarily because financial intermediaries:
A. can lower transaction costs and increase liquidity for savers.
B. have government-regulated prices, so there is little competition.
C. do not have to worry about information asymmetry.
D. have a government-provided monopoly.
Answer: A
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The difference between a demand deposit and a NOW account is that
A) checks may not be written against NOW account balances. B) demand deposits pay no interest. C) NOW accounts pay no interest. D) checks may not be written against demand deposit balances.
The existence of a monopoly:
A. creates market inefficiencies. B. causes consumers to get less at a higher price. C. causes a reduction in total surplus. D. All of these statements are true.
Why is it that a run on a single bank can turn into a widespread financial panic, or what the text identified as contagion?
What will be an ideal response?
Traditionally, a recession defined by declining Real GDP lasts over a period of at least
A. two consecutive calendar years. B. two consecutive calendar quarters. C. one calendar year. D. one calendar quarter.