Which of the following statements is correct? a. A higher policy rate decreases the overall spending in the economy. b. Banks make profit by investing in new businesses. c. Banking... Which of the following statements is correct? a. A higher policy rate decreases the overall spending in the economy. b. Banks make profit by investing in new businesses. c. Banking systems is immune to crisis as commercial bank loans extend the money base and help those in need. d. Money is the cash (coins and notes) used as the medium of exchange to purchase goods and services.
Understand the Problem
The question is asking to identify which of the provided statements about banking and economics is correct. It presents four options, each making a claim related to economic principles and banking functions.
Answer
d. Money is the cash (coins and notes) used as the medium of exchange to purchase goods and services.
The final answer is d. Money is the cash (coins and notes) used as the medium of exchange to purchase goods and services.
Answer for screen readers
The final answer is d. Money is the cash (coins and notes) used as the medium of exchange to purchase goods and services.
More Information
Statement d is a basic economic fact about the function of money. Statement a is also reasonable since higher policy rates typically reduce spending, but statement d is more universally accurate.
Tips
Misunderstanding the nature of bank profits and crises can lead to incorrect assumptions about statements b and c.
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