The question is based on the following information: Business A produces electrical plugs. It wants to expand its production and needs funds to finance the machinery that it needs to purchase in order to expand production. Business B is a mining business, and has just exported a large amount of platinum, for which it has received a large cash payment. Business B plans to build a new shaft in two years' time and therefore wants to invest this cash now and earn interest on it until it is needed. Business B purchases a financial asset from Business C. Business C then uses the funds it received from Business B to lend to Business A. Business A will pay back the funds over a period of two years. Which one of the following is a financial intermediary? Select one: a. Business A b. Business B c. Business C
The question is based on the following information: Business A produces electrical plugs. It wants to expand its production and needs funds to finance the machinery that it needs to purchase in order to expand production. Business B is a mining business, and has just exported a large amount of platinum, for which it has received a large cash payment. Business B plans to build a new shaft in two years' time and therefore wants to invest this cash now and earn interest on it until it is needed. Business B purchases a financial asset from Business C. Business C then uses the funds it received from Business B to lend to Business A. Business A will pay back the funds over a period of two years. Which one of the following is a financial intermediary? Select one: a. Business A b. Business B c. Business C
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The question is based on the following information:
Business A produces electrical plugs. It wants to expand its production and needs funds to finance the machinery that it needs to purchase in order to expand production. Business B is a mining business, and has just exported a large amount of platinum, for which it has received a large cash payment. Business B plans to build a new shaft in two years' time and therefore wants to invest this cash now and earn interest on it until it is needed.
Business B purchases a financial asset from Business C. Business C then uses the funds it received from Business B to lend to Business A. Business A will pay back the funds over a period of two years.
Which one of the following is a financial intermediary?
Select one:
a.
Business A
b.
Business B
c.
Business C
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