revision questions chapter 24 pt2 Flashcards
1
Q
The practice of borrowing short and lending long
A
creates liquidity
2
Q
Financial intermediaries create liquidity when they
A
borrow short and lend long
3
Q
Cheques are NOT money because they
A
are instructions to transfer money.
4
Q
Using a credit card can best be likened to
A
taking out a loan
5
Q
Which of the following is NOT included in the M4 definition of money?
A
Currency held by the government
6
Q
When a financial intermediary pools risk, it…
A
spreads loan losses across many depositors so that no one depositor faces a high degree of risk.
7
Q
Which of the following actions raise the interest rate?
A
An increase in the demand for money.
8
Q
The largest component of M4 is
A
time deposits at banks
