Question

The banking industry A) should have an efficiency advantage in gathering information that would eliminate the need for the money markets. B) exists primarily to mediate the asymmetric information problem between saver-lenders and borrower-spenders. C) is subject to more regulations and governmental costs than the money markets. D) all of the above are true. E) only A and B of the above are true.

Answer 1

Answer:

D) all of the above are true

Explanation:

The banking industry has the benefits of gathering information about the money market. Therefore, customer does not need to find it from the market. Again, it serves as an intermediary for the savers and borrowers to resolve the asymmetric information. Moreover, banks are subject to more regulations than any money market. Therefore, all the answers are correct.