In Developing Countries, It Is Not True That

question 51

Multiple Choice

In developing countries, it is not true that

• A)banks are often viewed with suspicion
• B)at the first sign of economic problems, many bank depositors withdraw their funds
• C)because banks cannot rely on a continuous supply of deposits, banks cannot make loans for extended periods
• D)if financial institutions fail to serve as intermediaries between savers and borrowers, the lack of funds for investment will make growth rates double
• E)the credit provided by banks as a percent of total output is one fifth that in high-income countries

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Definitions:

Initial Value Method

A method of investment accounting where the investment is initially recorded at cost, without subsequent adjustments for changes in fair value.

Equity Income

Income earned from investments in shares of companies, often received as dividends, indicating profit participation in these companies.

Internal Accounting Records

Documents and ledgers used within an organization to track financial transactions, operational data, and other key financial information.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the investee's net income or losses.