An effective financial system
A) Reallocates risk toward those most willing and able to manage it
B) Provides a variety of financial instruments that meet the objectives of heterogeneous surplus and deficit units
C) Provides a safe, reliable, and low-cost payment system
D) All of the above
Correct Answer:
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Q2: Households
A) Are dis-savers in their early and
Q3: Businesses
A) Are deficit units because the profit-maximizing
Q4: State and local governments
A) Are chronic deficit
Q5: Commercial banks
A) Are surplus units
B) Are deficit
Q6: For the United States, the external sector
Q7: If funds supplied by surplus units exceeded
Q8: Lower financing costs (interest rates)
A) Encourage businesses
Q9: Which of the following is characteristic of
Q10: In a competitive financial system
A) Surplus funds
Q11: If government spending were to increase and
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