Banks hold people's cash for free, and sometimes even pay for the privilege of holding it, because:
A. the cash can be deposited at the Federal Reserve Bank to earn interest.
B. the Federal Reserve requires that they do so.
C. deposits allow banks to make profitable loans.
D. they are nice.
Answer: C
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When diminishing marginal returns set in, total product will
A) increase at an increasing speed. B) increase at a decreasing speed. C) decrease at an increasing speed. D) decrease at a decreasing speed.
In an earlier chapter we learned that a risk neutral person would be indifferent to a gamble that involved a coin flip with a $1,000 win if heads and a $1,000 loss if tails. In this chapter that conclusion is qualified. What changes does this chapter introduce that make the earlier conclusion altered?
What will be an ideal response?
The following is NOT an example of a potential monitoring solution to moral hazard
a. blocking social network sites on company computers
b. rejecting a job candidate that fails to show up at the allotted interview time
c. GPS tracking devices in repair trucks
d. listening in on call center conversations
If a business owner uses a warehouse he owns to store his inventory, then his total costs will be less than if he rented warehouse space from someone else.
Answer the following statement true (T) or false (F)