Scelta multipla
A market is defined as:
174
views
1. Introduction to Microeconomics
Introduction to Economics
Scelta multipla
Which of the following statements best explains the role of banks as financial intermediaries in relation to transaction costs?
A
Banks only affect transaction costs for large corporations, not individuals.
B
Banks increase transaction costs by adding more steps to the lending process.
C
Banks reduce transaction costs by facilitating exchanges between savers and borrowers.
D
Banks have no effect on transaction costs in the financial system.
Guida verificata passo dopo passo1
Understand the concept of financial intermediaries: Banks act as financial intermediaries by connecting savers (those who have excess funds) with borrowers (those who need funds).
Define transaction costs: These are the costs associated with making an economic exchange, such as searching for a trading partner, negotiating terms, and enforcing contracts.
Analyze how banks reduce transaction costs: Banks pool resources from many savers, assess credit risk, and provide standardized contracts, which simplifies and lowers the costs of lending and borrowing.
Consider the impact on different participants: By reducing the effort and cost needed to find and evaluate counterparties, banks make financial transactions more efficient for both individuals and corporations.
Conclude that banks do not increase transaction costs; instead, they reduce them by facilitating exchanges, making the statement 'Banks reduce transaction costs by facilitating exchanges between savers and borrowers' the best explanation.
Video correlati
Pratica correlata
