Part 1Which of the following is not an important financial intermediary in the economy? A. Mutual funds. B. Commercial banks. C. The central bank. D. Pension funds.

Question

Part 1Which of the following is not an important financial intermediary in the​ economy? A. Mutual funds. B. Commercial banks. C. The central bank. D. Pension funds.

BlackTom AI · Accepted Answer

Reframing the question in my own words: identify which option does not describe an important financial intermediary in the economy. The answer choices are:
A. Mutual funds .
B. Commercial banks.
C. The central bank .
D. Pension funds .
Now, evaluate each option one by one.
Option A: Mutual funds. Mutual funds pool money from many investors to purchase a diversified portfolio of securities. They clearly act as financial intermediaries by transferring funds from savers to borrowers indirectly and offering liquidity and diversification. This option describes a legitimate intermediary, so it is not the correct pick for 'not an important financial intermediary.'
Option B: Commercial banks. Commercial banks take deposits and provide loans, payments services, and liquidity to the economy. They are classic financial intermediaries, channeling funds from savers to borrowers and facilitating financial transactions. This is also a genuine intermediary, so it would not be the correct choice.
Option C: The central bank. The central bank primarily conducts monetary policy, regulates the banking system, and manages issues of currency. While it interacts with financial institutions and can influence intermediation indirectly, it is not typically classified as a financial intermediary like banks, mutual funds, or pension funds that directly connect savers and borrowers. Its role is more of a monetary authority and lender of last resort rather than an intermediary that collects funds from savers to lend to borrowers. This distinction explains why it is not considered an important financial intermediary in the same sense as the others.
Option D: Pension funds. Pension funds collect contributions and invest them in assets to provide retirement benefits. They operate as financial intermediaries by accumulating funds from participants and investing them for future payouts, thereby channeling resources from current savers to long-term borrowers and projects. This is a standard intermediary function.
In summary, Options A, B, and D all represent standard financial intermediaries that bridge savers and borrowers, while Option C (the central bank) serves a regulatory and policy role rather than acting as a direct market intermediary. The wording of each option reflects different functions in the financial system, and the central bank’s primary duties are distinct from those of typical intermediaries.

Homework:Chapter 1 Homework

Part 1Which of the following is not an important financial intermediary in the economy? A. Mutual funds. B. Commercial banks. C. The central bank. D. Pension funds.

View Explanation

Log in for full answers

Similar Questions

Financial intermediaries are[Fill in the blank]

Part 1Which of the following is not an important financial intermediary in the economy? A. Commercial banks. B. Mutual funds. C. The Fed. D. Finance companies.

Part 1 Financial intermediaries LOADING... have a role to play in matching savers and borrowers for all of the following reasons except:Part 2 A. economies of scale B. risk sharing C. information symmetries D. minimising transaction costs

Which of the following statements is FALSE?

Which of the following is NOT a major function of financial intermediaries?

Which function of a financial intermediary reduces transaction and information costs between a corporation and individual which may encourage a higher rate of savings?

Which of the following is NOT a reason for the specialness of financial intermediaries?

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.

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler

Homework:Chapter 1 Homework

Part 1Which of the following is not an important financial intermediary in the​ economy? A. Mutual funds. B. Commercial banks. C. The central bank. D. Pension funds.

View Explanation

Log in for full answers

Similar Questions

Financial intermediaries are[Fill in the blank]

Part 1Which of the following is not an important financial intermediary in the​ economy? A. Commercial banks. B. Mutual funds. C. The Fed. D. Finance companies.

Part 1 Financial intermediaries LOADING... have a role to play in matching savers and borrowers for all of the following reasons except​:Part 2 A. economies of scale B. risk sharing C. information symmetries D. minimising transaction costs

Which of the following statements is FALSE?

Which of the following is NOT a major function of financial intermediaries?

Which function of a financial intermediary reduces transaction and information costs between a corporation and individual which may encourage a higher rate of savings?

Which of the following is NOT a reason for the specialness of financial intermediaries?

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.

More Practical Tools for Students Powered by AI Study Helper

Making Your Study Simpler

Part 1Which of the following is not an important financial intermediary in the economy? A. Mutual funds. B. Commercial banks. C. The central bank. D. Pension funds.

Part 1Which of the following is not an important financial intermediary in the economy? A. Commercial banks. B. Mutual funds. C. The Fed. D. Finance companies.

Part 1 Financial intermediaries LOADING... have a role to play in matching savers and borrowers for all of the following reasons except:Part 2 A. economies of scale B. risk sharing C. information symmetries D. minimising transaction costs