Which of the Following Is True of Banks

question 85

Multiple Choice

Which of the following is true of banks?

• A)Banks reduce the opportunity cost of holding idle cash.
• B)Banks act as intermediaries between the government and private investors.
• C)Banks can reduce risk by lending to rich borrowers.
• D)Banks reduce the transaction costs of borrowing and lending money.
• E)Banks can reduce risks by extending more loans.

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Definitions:

Monetary Growth Rate

The rate at which the amount of money in circulation increases over a specific period.

Money Supply

The lump sum of monetary assets available in an economy at a particular point.

Real Wages

The purchasing power of wages or income, considering the effects of inflation on buying capacity.

Monetary Policy

Monetary policy involves the management of a nation's money supply and interest rates by its central bank to control inflation, stabilize currency, and achieve economic growth.