Financial Innovation

question 30

Multiple Choice

Financial innovation

• A)may reduce the cost of risk sharing to lenders.
• B)is discouraged by the government because of its adverse impact on tax revenues.
• C)will generally reduce the liquidity of financial assets.
• D)has occurred frequently in financial markets, but rarely in financial intermediaries.

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Definitions:

Granite

A coarse-grained, felsic igneous rock containing mostly feldspar and quartz.

Continental Crust

The thick, generally granitic layer of the earth's crust that forms the continents and continental shelves, distinct from the denser, basaltic oceanic crust.

Upper Mantle

The upper mantle refers to the section of the Earth's mantle situated just beneath the Earth's crust, extending down to about 660 kilometers below the Earth's surface. This region is significant for its role in tectonic movements and the convection currents that drive plate tectonics.

Earth's Layers

The division of the Earth into distinct layers including the crust, mantle, and core, each with its own properties and composition.