Depository institution create liquidity when they A) buy ...

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Depository institution create liquidity when they
 
  A) buy assets that are liquid.
  B) borrow short and lend long.
  C) have liabilities that are illiquid.
  D) borrow long and lend short.

Question 2

The crowding-out effect refers to
 
  A) government spending crowding out private spending.
  B) private saving crowding out government saving.
  C) government investment crowding out private investment.
  D) private investment crowding out government saving.

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Answer to Question 1

B

Answer to Question 2

C

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