Which of the Following Involves Financial Intermediation

question 49

Multiple Choice

Which of the following involves financial intermediation?

• A)a bank makes a loan
• B)a household buys stock issued by a corporation
• C)a foreign government purchases U.S.government bonds
• D)All of the above are correct.

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Definitions:

Marginal Cost

The cost of producing one more unit of a good or service, crucial for economic decision-making processes.

Marginal Revenue

The revenue increase resulting from the sale of an extra unit of a good or service.

Monopolistically Competitive

A market structure in which several or many sellers each produce similar, but slightly differentiated products; competition is based on product differentiation, prices, and marketing.

Monopolistically Competitive

A market structure characterized by many firms selling products that are substitutes but not perfect substitutes, leading to some degree of market power for each firm.