Who Benefits from the Process of Financial Intermediation

question 313

Multiple Choice

Who benefits from the process of financial intermediation?

• A) savers only
• B) borrowers only
• C) both savers and borrowers
• D) There is no benefit, because money does not create wealth.

Understand the process of encoding, decoding, and feedback in communication.

Appreciate the role of communication in personal and professional settings.

Understand the concept of active listening and identify its components.

Recognize the elements and strategies of persuasion.

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Definitions:

Price Level

A measure of the average prices of goods and services in an economy at a given time, often considered in terms of inflation or deflation.

Real Interest Rate

The rate of interest an investor expects to receive after allowing for inflation. It more accurately reflects the real cost of borrowing and the real yield to lenders.

Mortgage-Backed Securities

Financial instruments secured by a pool of mortgage loans that generate income from the mortgage payments.

Financial Crisis

A significant disruption in the flow of funds from lenders to borrowers, often characterized by a sharp decline in asset prices and the insolvency of financial institutions, leading to economic recession.