An Important Function of Financial Intermediation Is

question 38

Multiple Choice

An important function of financial intermediation is:

• A) To convert financial securities with one set of characteristics into securities with another set of characteristics.
• B) To direct the money from lenders to borrowers
• C) To direct the money from borrowers to savers.
• D) For commercial banks to use consumer CD deposits to make deposits to small businesses.

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Definitions:

Competitive Markets

Markets characterized by a large number of buyers and sellers, where no single entity can influence prices significantly.

Government Intervention

Actions taken by the government to influence or directly regulate economic activity, markets, or distribution of resources.

Price Ceiling

A legal maximum on the price at which a good can be sold.

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive.