« previous next »

Author Question: What are the economic functions of depository institutions? What will be an ideal ... (Read 128 times)

tichca

  • Hero Member
  • *****
  • Posts: 554
on: Jun 29, 2018
What are the economic functions of depository institutions?
 
  What will be an ideal response?

Question 2

The big tradeoff is a tradeoff between
 
  A) efficiency and fairness.
  B) consumer surplus and producer surplus.
  C) taxes and subsidies.
  D) price ceilings and price floors.


gabrielle_lawrence

  • Sr. Member
  • ****
  • Posts: 353
Reply #1 on: Jun 29, 2018
Answer to Question 1

Depository institutions provide four economic services. First, they create liquidity, that is, bank deposits are highly liquid so that they are easily convertible into money. Second, they minimize cost of obtaining funds because borrowing from one bank is cheaper than borrowing from a variety of lenders. Third, they minimize cost of monitoring borrowers because depository institutions specialize in monitoring borrowers. Fourth, they pool risk by making loans to many borrowers.

Answer to Question 2

A


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

The newest statin drug, rosuvastatin, has been called a superstatin because it appears to reduce LDL cholesterol to a greater degree than the other approved statin drugs.

Did you know?

Medication errors are more common among seriously ill patients than with those with minor conditions.

Did you know?

People with alcoholism are at a much greater risk of malnutrition than are other people and usually exhibit low levels of most vitamins (especially folic acid). This is because alcohol often takes the place of 50% of their daily intake of calories, with little nutritional value contained in it.

Did you know?

Blood is approximately twice as thick as water because of the cells and other components found in it.

Did you know?

One way to reduce acid reflux is to lose two or three pounds. Most people lose weight in the belly area first when they increase exercise, meaning that heartburn can be reduced quickly by this method.

Structures and Functions of the Eye Structures and Functions of the Eye
Economic and Social Development Economic and Social Development
Economic and Social Development Economic and Social Development
Advanced functions application Advanced functions application
economic question economic question
economic question economic question
Video: Inflammation Animation

For a complete list of videos, visit our video library