Financial Intermediaries

question 18

Multiple Choice

Financial intermediaries

• A) exist because there are substantial information and transaction costs in the economy.
• B) improve the lot of the small saver.
• C) are involved in the process of indirect finance.
• D) do all of the above.
• E) do only A and B of the above.

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Definitions:

Japan

An island nation in East Asia, known for its rich culture, technological advancements, and significant economic power.

Equilibrium GDP

The level of GDP (Gross Domestic Product) at which total demand (aggregate demand) and total supply (aggregate supply) in the economy are equal, leading to an economic equilibrium.

Full Employment GDP

The output level of goods and services at which the economy's labor force is fully employed, indicating an optimal level of production without excessive inflation.

Inflationary Gap

A situation where the total demand in an economy exceeds the total supply, leading to an increase in the general price level or inflation.