Which of the Following Statements About Depository Institutions Is False

question 119

Multiple Choice

Which of the following statements about depository institutions is false?

• A)They create liquidity by borrowing long and lending short.
• B)They keep reserves to meet cash withdrawals.
• C)A credit union is an example of a depository institution.
• D)They pool, and therefore reduce, risk.
• E)They borrow at lower interest rates and lend at higher rates.

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Definitions:

Slope

The measure of the steepness or angle of a line, indicating the rate at which it rises or falls.

Average Costs

This refers to the per-unit production cost, calculated by dividing total costs by the total quantity produced, indicating the efficiency of production.

Output

The total amount of goods or services produced by a firm or economy.

Declines

Refers to a decrease in the value, amount, or quality of something, often observed in economic indicators or market trends.