Why Might Monetary Policy Authorities Be Concerned When Non-Bank Financial

question 174

Multiple Choice

Why might monetary policy authorities be concerned when non-bank financial intermediaries account for a growing share of an economy's financial assets?

• A) Monetary policy authorities fear that this situation might erode the value of the U.S. dollar in foreign exchange markets.
• B) Monetary policy authorities are concerned that this situation might promote income inequality since high income individuals are more likely to use the services of non-bank financial intermediaries, compared to low-income individuals.
• C) Monetary policy authorities fear that this situation might lessen their ability to control money supply because non-bank financial intermediaries are not as heavily regulated as banks.
• D) It will be more difficult for monetary policy authorities to monitor those assets that are most closely related to the level of economic activity.

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Definitions:

Neural Plaques

Deposits of beta-amyloid protein that form in the spaces between nerve cells in the brain, associated with Alzheimer's disease.

Diencephalon

A brain area (consisting of the mammillary bodies, thalamus, and hypothalamus) that plays a key role in transforming short-term to long-term memory, among other functions.

Short-Term Memory

The ability to keep a limited quantity of data actively accessible for a brief duration.

Brain Changes

Alterations in the brain's structure or function, which can result from injury, disease, psychological conditions, or ongoing development.