A bank is a financial intermediary. Which of the following statements is most accurate?
A. The bank's depositors are the ultimate lenders and the bank is the ultimate borrower.
B. The bank's depositors are the ultimate lenders, while those seeking loans from the bank are the ultimate spenders.
C. Those seeking loans from the bank are the ultimate spenders; the bank's stockholders are the ultimate lenders.
D. People seeking loans from the bank are the ultimate spenders while the bank is the ultimate lender.
Answer: B
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a. True b. False Indicate whether the statement is true or false
If the real rate of return is 2 percent, and the inflation rate is 0 percent, then the nominal interest rate must be:
A. 2 percent. B. 0 percent. C. 4 percent. D. ?2 percent.
Investment occurs when:
a. firms are very profitable and have lots of extra cash on hand. b. there is a reduction in risk-aversion. c. the expected real interest rate is less than the expected real return on the investment project. d. individuals realize that there are greater long-term gains in the equity and credit markets.
The government subsidizes education because:
A. education is thought to have positive externalities. B. private firms will not provide education. C. it is a pure public good. D. the government can provide a better education than can private firms.