From an economics standpoint, the main benefit of a healthy banking industry is the fact that banks themselves make a tremendous profit, allowing the owners of banks as well as their employees to have high incomes. banks force entrepreneurs to pay high interest rates, which contributes to solving the problem of wealth inequality. banks are able to minimize asymmetric information and adverse selection problems, which allows them to transfer idle funds to more productive ends in a cost-efficient manner. private banks help keep inflation under control.

From an economics standpoint, the main benefit of a healthy banking industry is the fact that banks themselves make a tremendous profit, allowing the owners of banks as well as their employees to have high incomes. banks force entrepreneurs to pay high interest rates, which contributes to solving the problem of wealth inequality. banks are able to minimize asymmetric information and adverse selection problems, which allows them to transfer idle funds to more productive ends in a cost-efficient manner. private banks help keep inflation under control.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter14: Money And The Federal Reserve System

Section: Chapter Questions

Problem 15SQ

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In the PowerPoint presentation, what did we learn about "shadow banking?" Multiple Choice This market consists of pawn shops, payday check cashing centers, and high-interest rate online lenders like LendingClub and Prosper. The Fed really doesn't do a good job in regulating these types of lenders. This marketplace is illegal and is run by organizations like the Hell's Angels and the Mafia. This is shadow banking. Shadow Banking is simply offshore banks located outside of the U.S. This is the Federal Reserves Bank's super-secret lending program where they lend money to finance CIA orchestrated plans to overthrow foreign governments, counter-terrorist operations, anti-money laundering strike teams, and to catch those involved in counterfeiting.
In general, ordinary people only know that bank products and services are limited to conventional savings and loans, even though there are many more. There are many interesting banking products that can be used, including Islamic bank products or Islamic banking products that have not been widely known by the public. Currently, there are several types of Islamic bank products that are tailored to the needs and developments of the times. It should be noted that Islamic banks do not only serve hajj savings or umrah savings, but there are also several other products, including business capital loans. Explain what you know about Islamic products
You are the Chairman of the Board of Resilient National Bank. Your job is to conduct a critical analysis of how the pandemic will shape the business model of your institution. Your analysis should include how the banking system has evolved in your jurisdiction from 1996- 2021 from a legislative, regulatory, technological. economic, political and social standpoint.
During the 2007-2009 period, the US government made its most dramatic interventions in financial markets since the 1930s. It has been argued that the current crisis could redraw the boundaries between government and markets. For some, “freer and more flexible markets will still do more for the world economy than the heavy hand of government” whereas for others “big banking crises are ultimately solved by early and decisive government action and financial regulation.” Evaluate these positions.
Which of the following scenarios best illustrates the concept of "Moral Hazard" in the context of money and banking? Multiple Choice A government implementing a tax cut to stimulate economic growth. A bank offering competitive interest rates to attract new customers. A borrower taking on excessive risk because they know their loans are backed by a government bailout. An individual investing in a diversified portfolio to manage risk.
Which of the following is NOT typically a role for a financial intermediary...? make public financial statements of borrowers evaluate the riskiness of lending to borrowers pool funds from lenders monitor the financial conditions of borrowers
Depository institutions, nondepository institutions, and commercial banks Group of answer choices? are all financial intermediaries. offer the same kinds of financial services to the public. have the same types of liabilities and different types of assets. are different because only depository institutions are profit-driven.
Why are financial intermediaries the most heavily regulated businesses in the economy? Explain why stock market is an important factor in business investment decisions? What is inflation? What explains inflation? If there is a recession, will it be more difficult to find a job when you graduate? Explain. What are the six types of regulations the government employs in an attempt to ensure the soundness of our financial intermediaries? Explain. Explain the difference between debt and equity markets. primary and secondary markets, exchange and over the counter markets and money and capital markets. What is the difference between foreign bond and a Eurobond? Which institutions are subject to Federal Deposit Insurance corporation (FDIC) regulations, and what is the nature of the regulations? What are the reasons for high transaction costs to exist in a barter economy? What separates the assets included in M1 from the assets included in M2? Does it matter what definition of money policy…
Low-income consumers often don’t have bank accounts and credit cards. Describe how some financial institutions are trying to meet the needs of these “unbanked” consumers.
Which of the following statements is correct? Banks that are too big to fail' are careful not to make risky loans. The problem with the credit market is that rich people will always get a loan irrespective of the quality of their project. Banks are described as 'too big to fail' when their large size makes them safe institutions. It is easier for rich people to get loans because they are able to provide equity or collateral.
The banking industry A) should have an efficiency advantage in gathering information that would eliminate the need for the money markets. B) exists primarily to mediate the asymmetric information problem between saver-lenders and borrower-spenders. C) is subject to more regulations and governmental costs than the money markets. D) all of the above are true. E) only A and B of the above are true.
The main functions of the financial system include: Provide a means of making payments. Prepare to sacrifice some income to avoid uncertainty. Assist borrowing and lending. All of the above

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		banks themselves make a tremendous profit, allowing the owners of banks as well as their employees to have high incomes.
		banks force entrepreneurs to pay high interest rates, which contributes to solving the problem of wealth inequality.
		banks are able to minimize asymmetric information and adverse selection problems, which allows them to transfer idle funds to more productive ends in a cost-efficient manner.
		private banks help keep inflation under control.