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Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch
Edition 1ISBN: 978-0077332648Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch
Edition 1ISBN: 978-0077332648 Exercise 16
The chapter discusses three main functions of a banking system. Classify each of the following by the function it best represents.
a. Aaron can get cash out of the ATM at any time of day or night.
b. Instead of lending all her savings out to one borrower, Barbara's bank makes the money in her savings account available to a variety of firms, with different characteristics and risk profiles, wishing to invest.
c. When Charlie's car suddenly breaks down, he can quickly withdraw funds from his savings account to pay the mechanic and rent a car.
d. Donna can get start-up funds for her new hair salon from a bank, instead of having to find people in her neighborhood willing to lend their extra money.
a. Aaron can get cash out of the ATM at any time of day or night.
b. Instead of lending all her savings out to one borrower, Barbara's bank makes the money in her savings account available to a variety of firms, with different characteristics and risk profiles, wishing to invest.
c. When Charlie's car suddenly breaks down, he can quickly withdraw funds from his savings account to pay the mechanic and rent a car.
d. Donna can get start-up funds for her new hair salon from a bank, instead of having to find people in her neighborhood willing to lend their extra money.
Explanation
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The banking system is the one that bring...
Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch
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