Which of These Statements Best Describes the Function of Banks

question 13

Multiple Choice

Which of these statements best describes the function of banks as part of the aggregate economy?

• A)Banks take deposits and make loans.
• B)Banks create or reduce the amount of money available in the economy.
• C)Banks reduce moral hazard.
• D)Banks lend money to those business firms most in need of it.

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Definitions:

Demand

The desire of purchasers to buy a certain good or service, combined with their ability and willingness to pay for it.

Price

The monetary value assigned to a product or service for purchase.

Good Bought

Refers to a product or service that has been purchased by a consumer or organization.

Equilibrium Price

Equilibrium price is the price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in a stable market situation.