Since one function of financial intermediaries is to provide liquidity:
A. regulations require financial intermediaries to keep 50% of their assets in cash.
B. they keep almost all of their funds in cash.
C. they must know approximately how much liquidity their customers will need each day and have these funds available.
D. they must keep all of their funds in short-term securities.
Answer: C
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Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real GDP and reserves account in the context of the Three-Sector-Model? a. Real GDP falls and reserves account becomes more
negative (or less positive). b. Real GDP falls and reserves account remains the same. c. Real GDP and reserves account remain the same. d. Real GDP rises and reserves account remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Which one of the following expressions best states the idea of opportunity cost?
A. "He who hesitates is lost." B. "All that glitters is not gold." C. "A penny saved is a penny earned." D. "There is no such thing as a free lunch."