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Chapter 15: Q.21 (page 347)

Does Figure 15-3 depict direct finance or indirect finance? Explain. How could the figure be revised to illustrate the alternative form of finance?

Short Answer

Expert verified

The figure depicts indirect finance

Step by step solution

01

introduction

Valuable open doors for loaning and acquiring emerge when there is a jumble between the wages and uses of various areas of the economy.

02

explanation

Extreme moneylenders, for example, families, organizations and states place their investment funds with monetary middle people, for example, business banks, common assets and so forth. These monetary go-betweens, thus, loan to extreme borrowers like families, organizations and legislatures. Since extreme loan specialists don't loan straightforwardly to extreme borrowers, the figure portrays aberrant money.

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Most popular questions from this chapter

Draw an empty bank balance sheet, with the heading "Assets" on the left and the heading "Liabilities" on the right. Then place the following items on the proper side of the balance sheet:

a. Loans to a private company

b. Borrowings from a Federal Reserve district bank

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e. Vault cash

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Identify whether each of the following amounts is counted in M1 only, M2 only, both M1and M2, or neither.

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Draw an empty bank balance sheet, with the heading "Assets" on the left and the heading "Liabilities" on the right. Then place the following items on the proper side of the balance sheet.

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c. U.S. Treasury bonds

d. Small-denomination time deposits

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