Determine the two ways that banking system helps to improve the allocation of saving.

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Answer 1

Question

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.

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Suppose consumers lose their faith in the banking system, and decide to start stuffing their money under their mattress rather than saving it in a bank or buying bonds. This will cause interest rates to _____ and the amount borrowed to _____ increase or decrease?

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The suppliers of loanable funds are Select one: a. people who save money at banks. b. banks who give loans to borrowers. c. central banks (like the Federal Reserve System) that produce currency and coins. d. borrowers who supply loan applications to banks.

Answer 2

Question

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.

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Answer 4

Question

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.

Answer 6

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.

Answer 7

Chapter 9, Problem 1RQ

To determine

Determine the two ways that banking system helps to improve the allocation of saving.

Answer 8

Expert Solution & Answer

Explanation of Solution

The existing banking system in our economy always helps for the better allocation of savings. The two main possible ways that banking system follows to improve the allocation of savings are listed below:

Provide information: The banking system provides the information about the different investment opportunities in an economy. It helps the savers to allocate their savings in the most productive investment opportunities. For instance, stock and bond analysts investigate the potential returns of companies seeking funds, in such situations, the information provided by the banking system directing the resources to the most attractive opportunities
Share the risks: The banking system helps the savers to share the risk of individual investment projects by diversify across a wide variety of stocks.