In Order to Reduce Risk and Increase the Safety of Financial

question 86

Multiple Choice

In order to reduce risk and increase the safety of financial institutions,commercial banks and other depository institutions are prohibited from

• A)owning municipal bonds.
• B)making real estate loans.
• C)making personal loans.
• D)owning common stock.

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Definitions:

Fixed Costs

Costs that do not change with an increase or decrease in the amount of goods or services produced or sold.

Corporate Tax Rate

The percentage of a company's taxable income that it pays to federal, state, or local tax authorities.

Demand Shock

An event that affects the demand for goods and services in the economy.

Money Supply

The sum of all financial assets present in an economy at a given time, encompassing cash, coins, and the amounts in checking and savings accounts.