Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter 25, Problem 1SQ
To determine
The beginning of the European Banks.
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European banks began with which of the following?
a) Monarchs were the first bankers, lending out cash to help the poor learn a craft.
b) Churches were the first bankers, lending out cash to help the poor learn a craft.
c) Goldsmiths were the first bankers, and the paper receipts they issued for gold held on deposit became valued as money.
d) Fishermen were the first bankers, and the paper receipts they issued for fish they stored in the hulls of their ships became valued as money.
“When a commercial bank makes loans, it creates money; when loans are repaid, money is destroyed.” Explain.
What are the main functions of banks? Explain the role played by commercial banks in the economic development of a country.
Chapter 25 Solutions
Economics For Today
Ch. 25.3 - Prob. 1YTECh. 25 - Prob. 1SQPCh. 25 - Prob. 2SQPCh. 25 - Prob. 3SQPCh. 25 - Prob. 4SQPCh. 25 - Prob. 5SQPCh. 25 - Prob. 6SQPCh. 25 - Prob. 7SQPCh. 25 - Prob. 8SQPCh. 25 - Prob. 9SQP
Ch. 25 - Prob. 10SQPCh. 25 - Prob. 11SQPCh. 25 - Prob. 1SQCh. 25 - Prob. 2SQCh. 25 - Prob. 3SQCh. 25 - Prob. 4SQCh. 25 - Prob. 5SQCh. 25 - Prob. 6SQCh. 25 - Prob. 7SQCh. 25 - Prob. 8SQCh. 25 - Prob. 9SQCh. 25 - Prob. 10SQCh. 25 - Prob. 11SQCh. 25 - Prob. 12SQCh. 25 - Prob. 13SQCh. 25 - Prob. 14SQCh. 25 - Prob. 15SQCh. 25 - Prob. 16SQCh. 25 - Prob. 17SQCh. 25 - Prob. 18SQCh. 25 - Prob. 19SQCh. 25 - Prob. 20SQ
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- Which of the following is true about banks? Select one: a. The interest rate banks charge when they lend is the same they pay for the deposits they receive. b. Banks are financial institutions through which savers can directly provide funds to borrowers. c. Typically, banks receive few but big deposits, which they then use to make many small loans. d. Through the checking accounts they facilitate, banks provide a medium of exchange.arrow_forward4 In medieval times, many goldsmiths would offer to store gold in return for a fee. They provided anyone depositing gold with a receipt, which represented a legal claim on the goldsmith to exchange the receipt for the amount of gold written on it. if these receipts could be bought and sold and redeemed by someone other than the person who deposited the gold, were medieval goldsmiths banks? Briefly explain. Is multiple money creation possible in this system? Why and why not?arrow_forwardWhich of the following is not a central bank? a. The Bank of England b. The Bank of Japan c. The Bank of America d. The Federal Reservearrow_forward
- "People are poor because they don't have very much money. Yet, central bankers keep money scarce. If people had more money, poverty could be eliminated." Evaluate this view. Do you think it reflects sound economics?arrow_forwardWhich of the following factors pose a limit on the ability of commercial banks to increase the quantity of money in circulation by extending new loans? Select one or more: a. the quantity of Central Bank reserves that they own b. the quantity of money that savers lent to them by opening deposits c. the behavior of households and firms, which reduce the quantity of money in circulation by repaying previous loans. d. the availability of profitable lending opportunities in the economy e. the willingness of household and firms to take up new debts at the given interest ratearrow_forwardWhich of the following is not a function of the central bank? Select one: a. The issuance of bank notes and coins for the country b. Manage foreign exchange c. It acts as the Government’s bank d. Stimulate the economy through government spendingarrow_forward
- What are bank reserves? a.Deposits that are held in the form of gold reserves b.The fraction of deposits kept as currency that are not used for lending purposes c.The value of the owner’s equity in the bank d.The value of investments a bank keeps in excess of the value of deposits e.The sum of all loans a bank makes to borrowersarrow_forwardMoney is used as a means to make a payment, store of value (savings), and place value on goods and services most economist believe money contributes to economic growth and development by make it easier for people to complete their transactions. Barter is the exchange of goods and or services without the use of money. However, "if money did not exist we would invent it" as stated by some economists.What is the function of money?Discuss how money contributes to economic growth and\or development?If there is no money will society find a way to exchange goods and services without it? Explain.arrow_forwardn the Middle Ages, goldsmiths took in customers’ deposits (gold coins) and issued receipts that functioned much like checks do today. People used the receipts as a medium of exchange. Goldsmiths also issued loans by writing additional receipts against which they were holding no gold to borrowers. Were goldsmiths engaging in fractional reserve banking? Why do you think that customers turned their gold over to goldsmiths? Who benefited from the goldsmiths’ action? Why did such a system generally work? When would it have been likely to fail?arrow_forward
- Which of the following is NOT TRUE about Financial Intermediaries? *A. Financial Intermediaries are institutions that serves as a bridge between the SSUs and DSUs.B. Financial Intermediaries makes the financial system more efficient.C. Financial Intermediaries earn profits through various transactions and services they offer.D. Financial Intermediaries offers investment advices.arrow_forwardDiscuss the role of banks as financial institutions that fuel the economic growth of a nation. Because corporations do not actually raise any funds in secondary markets, they are less important to the economy than primary markets.”arrow_forwardHistorically, which of the following was correct about banks in America ? A. most banks were small with a few branches B. most banks were small in size with one branch C. most banks were able to make a diversity of loans in different geographical locations. D. most banks were able to take advantage of economies of scalearrow_forward
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