Don't use Ai What does it mean when we say that individuals as a group are net suppliers of funds for financial institutions? What doyou think the consequences might be in financial markets if individuals consumed more of their incomes and therebyreduced the supply of funds available to financial institutions?What does it mean when we say that individuals as a group are net suppliers of funds for financial institutions? (Selectthe best answer below.)A. Individuals, as a whole, spend more than they make. The excess is provided for by businesses.B. Individuals, as a whole, spend less than they make. The excess is invested, making it available for businessesand governments.C. Individuals, as a whole, spend more than they make. The excess is provided for by financial institutions.D. Individuals, as a whole, spend less than they make. The amount that they spend is made available tobusinesses through financial institutions.

When we say that individuals as a group are net suppliers of funds for financial institutions, it…

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Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter27: Money And Banking

Section: Chapter Questions

Problem 6SCQ: Imagine that you are in the position of buying loans in the secondary market (that is, buying the...

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Paysl Question 20 Which one of the following is an incorrect statement about US financial system? O Saving and investment are important determinants of long run growth in GDP and living standards. O The primary advantage of mutual funds is that they allow people with small amounts of money to diversity their holdings O Financial Intermediaries are financial institutions through which savers can directly provide funds to borrowers O The institutions that make up this system-the bond market, the stock market, banks, and mutual funds-- have the role of coordinating the economy's saving and investment. Question 21 Which one of the folawing is an incorrect statement about the history of The US Central Bank? O In 1836. President Andrew Jackson closed the Second Bank of the United States (SBUS) because of his deep distrust of financial elites. It led to a period of rapid monetary expansion and inflation, which was soon folowed by financial panics in 1837 and 1839 and a severe recession O The…
Imagine that you are in the position of buying loans in the secondary market (that is, buying the right to collect the payments on loans) for a bank or other financial services company. Explain why you would be willing to pay more or less for a given loan If: The borrower has been late on a number of loan payments Interest rates In the economy as a whole have risen since the bank made the loan The borrower Is a firm that has just declared a high level of profits Interest rates in the economy as a whole have fallen since the bank made the loan
Calculate the equity each of these people has in his or her home: Fred just bought a house for 200,000 by putting 10 as a down payment and borrowing the rest from the bank. Freda bought a house for 150,000 in cash, but if she were to sell it now, it would sell for 250,000. Frank bought a house for 100,000. He put 20 down and borrowed the rest from the bank. However, the value of the house has now increased to 160,000 and he has paid off 20,000 of the bank loan.
Question 13 Select the correct statement: Your interest rate on your loan with the credit card company can go up big O A. time if you make late payments, or go over your credit limit. Your interest rates on your loan with many credit card companies can go up O B. big time if you make late payments on other bills that have nothing to do with your credit card. Your interest rate on your loan with many credit card companies can go up C. big time for no reason at all. O D. All of the above. Question 14 Save and Quit s a really tough question. Select the correct statement: DELL 24 &
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3. According to an article on the junk bond market in Europe published in the Economist in 2016, "The spread (the interest premium over government borrowing rates) paid by junk-bond issuers has risen by nearly three-and-a-half percentage points since March last year." (a) How can you tell whether a newly issued bond is a junk bond? (b) Why would the spread between government bonds and junk bonds have been rising? (c) Does this increase in the spread make junk bonds a better or a worse investment compared with buying government-issued bonds? Briefly explain.
QUESTION 7 Table 2. TC FC VC MC AFC AVC ATC H. D SO 1 L $91 V A J M $49 3 K N P R $112 Consider the information in Table 2. What is the value of E? QUESTION 8 Table 2. Q TC FC VC MC AFC AVC ATC D. $0 1 Z E $80 V 2 F J M $42 T 3 G K P. R S108 Consider the information in Table 2. What is the value of D? HNA 2.
Joe owns a few collectible cars from the 1950's. He has decided to go solar and needs money to finance the new solar system and installation. Joe decides to sell one his cars to get the financing he needs. This is an example of? O Equity Financing O Debt Financing O Liquidiity Financing O Abraham Lincoln
2. An article in the New York Times in mid-2012 noted, "with the economy still struggling and new regulations meant to eliminate bad lending, bank loans continue to lag" (a) (b) (c) What does the article mean by "bad lending”? Which types of firms might find it harder to receive loans if banks reduce "bad lending"? Briefly explain. What alternatives do the firms you identified in part (b) have for obtaining credit if they are unable to get bank loans? Source: Ian Mount, "When Banks Won't Lend, There Are Alternatives, Though Often Expensive," New York Times, August 1, 2012.
6.
If you are a banker and expect interest rates to rise inthe future, would you prefer to make short-term loansor long-term loans?
[Related to Solved Problem 5.2A] An article on the American Express website observes that "often, an interest carry trade involves maturity mismatch, since longer-term lending typically carries higher interest rates than short-term." How might you be able to make a profit from the fact that long-term interest rates are typically higher than short-term interest rates? A. By borrowing short term and investing the funds long term. OB. By purchasing more short-term securities than long-term securities. OC. By borrowing long term and investing the funds short term. OD. By purchasing more long-term securities than short-term securities. Why, in practice, is it difficult for the average investor to make a profit from an interest carry trade? OA. The average investor does not have access to long-term investments, and can only access them through expensive brokerage arrangements. B. The average investor often overestimates inflation rates resulting in negative real returns on long-term…

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