The financial system provides risk sharing by allowing
A) borrowers to obtain funds either directly or indirectly.
B) savers to earn interest tax-free.
C) borrowers to convert liabilities into assets.
D) savers to hold many assets.
D
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In the classical model, an increase in aggregate demand will lead to an increase in wage rates while a decrease in aggregate demand will
A) change the price of capital. B) leave wages unchanged since workers will not take a cut in pay. C) increase wages since business will be desperate for labor. D) decrease wages.
In the case of public goods, the ability to free ride on the efforts of others is an example of
A) low transactions costs. B) insecure property rights. C) government subsidization. D) mutual assurance.
A decrease in the marginal income tax rate is a fiscal policy which will increase aggregate demand
Indicate whether the statement is true or false
Prior to 1970, mortgages were ________ resold in the secondary market
A) never B) often C) rarely D) always