Financial intermediation is best defined as the process by which
A) corporations issue new stock.
B) liabilities are liquidated.
C) financial institutions accept savings from savers and make loans to investors.
D) inflation is controlled.
C
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Suppose there are two policy options facing a vote in the Senate. In the first, government spending will increase $50 billion, while the second option is to cut taxes by $50 billion. A Keynesian economist would argue for
A) the spending option because it has a bigger impact on total spending. The spending directly raises total spending plus it works through the multiplier, while the tax cut only works through the multiplier. B) the tax option because it is easier to pass. The effects on total spending would be identical. C) the spending option because it won't affect the deficit the way the tax cut would. D) the tax option because it also affects the incentives workers face. Long-run aggregate supply will increase with the tax cut, but not with the spending increase.
Following are the controversies over how poverty should be measured, except:
a. government transfers and other programs are not properly taken into account in the measures of poverty. b. the poverty measures do not distinguish among the needs of different individuals. c. the concept of poverty line does not draw any distinction between income and purchasing power. d. the concept of poverty line does not take into account the expenditure on food by each family. e. the income generated in the underground economy are not taken into account.
As exemptions are raised and allowable deductions are increased, there is
A. Greater horizontal equity. B. Greater vertical inequity. C. A smaller gap between effective and nominal tax rates. D. A smaller gap between gross income and taxable income.
The effect of a change in taxes is less than the same sized change in government purchases because...
What will be an ideal response?