Direct financing occurs when:
A) an SSU borrows directly from a DSU.
B) a DSU borrows directly from a SSU.
C) an SSU borrows from the federal government.
D) a DSU borrows from the federal government.

Question

Quizplus · Accepted Answer

Direct financing occurs when a DSU borrows directly from a SSU. This means that the borrower (DSU) obtains funds directly from the lender (SSU) without involving any intermediary financial institutions or governments. Option A is incorrect because it describes indirect financing where SSU deposits money into a financial institution which then lends to a DSU. Options C and D are incorrect because they involve borrowing from the federal government, which is not an example of direct financing.

Direct Financing Occurs When