« previous next »

Author Question: What are the economic functions of depository institutions? What will be an ideal ... (Read 141 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?

Giardia is one of the most common intestinal parasites worldwide, and infects up to 20% of the world population, mostly in poorer countries with inadequate sanitation. Infections are most common in children, though chronic Giardia is more common in adults.

Did you know?

Malaria mortality rates are falling. Increased malaria prevention and control measures have greatly improved these rates. Since 2000, malaria mortality rates have fallen globally by 60% among all age groups, and by 65% among children under age 5.

Did you know?

Cocaine was isolated in 1860 and first used as a local anesthetic in 1884. Its first clinical use was by Sigmund Freud to wean a patient from morphine addiction. The fictional character Sherlock Holmes was supposed to be addicted to cocaine by injection.

Did you know?

In 2012, nearly 24 milliion Americans, aged 12 and older, had abused an illicit drug, according to the National Institute on Drug Abuse (NIDA).

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.

How to find the limits of trigonometry functions How to find the limits of trigonometry functions
Relationship between Economic Openness and GDP per Capita Relationship between Economic Openness and GDP per Capita
Endocrine System: Facts, Functions and Diseases Endocrine System: Facts, Functions and Diseases
Functions and Properties of Blood Functions and Properties of Blood
economic question economic question
economic question economic question
Video: Regulation of GFR: autoregulation via tubuloglomerular feedback, neural & hormonal regulation

For a complete list of videos, visit our video library