Direct Finance Occurs When

question 43

Multiple Choice

Direct finance occurs when

• A) savers go directly to borrowers for funds.
• B) borrowers deposit funds into banks,which then loan these funds to savers.
• C) savers deposit funds into banks,which then loan these funds to borrowers.
• D) borrowers go directly to savers for funds.
• E) banks get involved with financing.

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Definitions:

Commercial Dealing

Activities involved in the purchase and sale of goods and services in the marketplace.

Industry

The economic activity concerned with the production of goods, services, and the extraction of raw materials.

Requirements Contract

An agreement in which one party agrees to purchase all of his or her requirements of a particular product from another party. See also output contract.

Output Contract

An agreement in which a seller agrees to sell “all the goods we manufacture” or “all the crops we produce” to a particular buyer. See also requirements contract.