How Is the Shadow Banking System the Same as the Traditional

question 8

Multiple Choice

How is the shadow banking system the same as the traditional banking system?

• A)It intermediates the flow of funds between net savers and net borrows.
• B)It serves as a middle man.
• C)The complete credit intermediation is performed through a series of steps involving many nonbank financial service firms.
• D)The complete credit intermediation is performed by a single bank.

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Definitions:

Cash Flows

The combined total of cash inflows and outflows in a business, essentially affecting its capacity to meet short-term obligations.

Seasonal Sales

Sales fluctuations that occur at certain times of the year, often due to changes in weather, holidays, or other seasonal factors.

Cash Disbursements

The outflow of cash to pay expenses, purchase assets, or repay debts.