A bank is engaged in _____ when it accepts the farmer's deposit of $127,000, and then makes a business loan of $50,000 to a small business owner.

Question

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Financial intermediation is the process where financial institutions (like banks) accept deposits from savers and then lend those funds to borrowers. In this scenario, the bank is acting as an intermediary between the farmer (saver) and the small business owner (borrower).

A Bank Is Engaged in _____ When It Accepts the Farmer's