Banks

a.

play no role in the financial system.

b.

are financial intermediaries

c.

are financial markets, as are bond markets.

d.

All of the above are correct.

Question

Banks

a.

play no role in the financial system.

b.

are financial intermediaries

c.

are financial markets, as are bond markets.

d.

All of the above are correct.

BlackTom AI · Accepted Answer

Question: Banks

Option a: 'play no role in the financial system.' This is incorrect because banks are integral to the financial system: they channel funds from savers to borrowers, provide payment services, and contribute to liquidity and credit creation. Saying they play no role overlooks these essential functions.

Option b: 'are financial intermediaries' This statement is accurate. Banks serve as financial intermediaries by connecting those who have surplus funds with those who need funds, facilitating deposits, loans, and various credit services.

Option c: 'are financial markets, as are bond markets.' This is misleading. Banks are not financial markets; they are institutions that operate within the financial system, primarily as intermediaries. Financial markets (including bond markets) involve the buying and selling of financial instruments among investors, whereas banks primarily perform intermediation and lending activities.

Option d: 'All of the above are correct.' Since options a and c are incorrect, this overarching claim is false. The statement would only be true if every listed assertion were correct, which they are not.

In summary, each option presents a claim about the role or nature of banks. The only statement that accurately characterizes banks is that they are financial intermediaries, not that they play no role, nor that they themselves are financial markets, and not that all statements are correct.

LA-ECON-1101-813-14402-202520 Chapter 27-1

Banks a. play no role in the financial system. b. are financial intermediaries c. are financial markets, as are bond markets. d. All of the above are correct.

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