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2 years ago

DISCUSS WHY WE NEED BANKS IN THE FINANCIAL SYSTEM?

Business

1 answer:

zheka24 [161]2 years ago

3 0

Answer:

Because they play a role in the transmission of monetary policy and are one of the government's best tools for gaining economic growth without inflation.

<h3>What is a financial system?</h3>

The financial system is the process by which funds are transferred between those having excess funds(savers) and those needing additional funds(users).

<h3>What are banks?</h3>

A financial establishment that invests money deposited by customers, pays it out when required, makes loans at interest, and exchanges currency. The main function of commercial banks is to accept deposits and then to lend the same money (minus required reserves) back out. Banks make a profit by charging a higher interest rate on loans than the interest rate they pay on deposits. Through the loan process, banks are actually able to create money.

<h3>What is Monetary Policy?</h3>

Monetary Policy is regulating the money supply, controlling inflation/deflation, adjusting the interest rates to regulate the economy, the cost of money, and adjusting the band<u> reserve requirements</u>.

<h3>What is inflation?</h3>

Inflation is a sustained rise in the general price level in an economy over time. This does not mean that the price of every good and service increases, but on average the prices are rising. Therefore constitutes a reduction in purchasing power, where <u>GDP remains constant.</u>

<h3>So in the end, why are banks so important to the financial system and overall, the economy of America?</h3>

A well-functioning financial system is critical to the contemporary economy, and banks play critical roles in society. As a result, they must be safe. In both up and down markets, banks should be able to lend money to people and companies. Payments for products and services should also be completed quickly, securely, and affordably. If banks fail to carry out these responsibilities, the ramifications for the entire economy might swiftly grow so widespread that even the financial sector would be vulnerable to significant shocks. As a result, banks must be able to withstand losses while still meeting their present <u>payment obligations</u>. To do so, banks must adhere to <u>stringent regulatory restrictions</u>. The capital and liquidity (<u>money that can be paid quickly</u>) criteria that banks must fulfill in order to meet their present <em>payment obligations are among them</em>. The banks' internal payment systems must be safe and efficient as well.

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The Burger Doodle restaurant chain purchases ingredients from four different food suppliers. The company wants to construct a ne

Fittoniya [83]

Given Information:

Site 1: x1 = 360 , y1 = 180

Site 2: x2 = 420 , y2 = 450

Site 3: x3 = 250 , y3 = 400

Solution:

Xa = 200, Ya = 200, Wa = 75

Xb = 100, Yb = 500, Wb = 105

Xc = 250, Yc = 600, Wc = 135

Xd = 500, Yd = 300, Wd = 60

If centre of gravity is (x,y)

then x = (200*75+100*105+250*135+500*60)/(75+105+135+60)

x = 238

then y = (200*75+500*105+600*135+300*60)/(75+105+135+60)

y = 444

Using centre-of-gravity method, location of distribution centre = (238,444)

Using rectilinear distance,

Load distance score of Site 1: 75*(abs(360-200)+abs(180-200))+105*(abs(360-100)+abs(180-500))+135*(abs(360-250)+abs(180-600))+60*(abs(360-500)+abs(180-300)) = 161550

Load distance score of Site 2: 75*(abs(420-200)+abs(450-200))+105*(abs(420-100)+abs(450-500))+135*(abs(420-250)+abs(450-600))+60*(abs(420-500)+abs(450-300)) = 131100

Load distance score of Site 3: 75*(abs(250-200)+abs(400-200))+105*(abs(250-100)+abs(400-500))+135*(abs(250-250)+abs(400-600))+60*(abs(250-500)+abs(400-300)) = 93000

Site 3 tends to be optimal as it offers a lower distance ranking.

8 0

4 years ago

Luther Inc., has 4,000 shares of 5%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock o

Ivahew [28]

Answer:

$12,000

Explanation:

For computing the preferred dividend, first we have to find out the yearly dividend which is shown below:

= Number of shares × par value per share × dividend rate

= 4,000 shares × $50 × 5%

= $10,000

In 2017, the dividend was paid of $8,000

Remaining dividend left is $10,000 - $8,000 = $2,000

So, the total preference dividend in 2018 would be

= Yearly dividend + remaining dividend left

= $10,000 + $2,000

= $12,000

Out of $40,000, the $12,000 will be paid to preferred stockholders and the remaining $28,000 will be paid to equity stockholders

7 0

3 years ago

Which of the following refers to the process of getting detailed information about jobs?A. Job rotationB. Supply chain managemen

Andrei [34K]

E. Job orientation is the correct answer

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3 years ago

What happens if you perm your hair after washing it?

natali 33 [55]

Its almost the same except your heir will be cleaner and fresher. somethimes it depends on your hair type and texture.

5 0

3 years ago

What is the South African government providing and to whom

daser333 [38]

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4 years ago