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1. Banks and mutual funds are examples of financial intermediaries. (T/F) 2. If the federal government...

1. Banks and mutual funds are examples of financial intermediaries. (T/F)

2. If the federal government runs a budget deficit then public saving is negative. (T/F)

3. The financial system consists of the institutions that help to match one person’s saving with another person’s investment. (T/F)

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Answer #1

1. TRUE.

            Banks and mutual funds are examples of financial intermediaries. The term financial intermediary refers to those financial institutions which act as a middle man to facilitate financial transactions between two parties. It includes commercial banks, investment banks, insurance company, pension fund, mutual fund etc.

2. TRUE.

          Public saving is nothing but the difference between tax collected and government expenditure. When government spending exceeds the tax collected the budget becomes a deficit budget and whenever the budget is deficit, public saving is negative.

3. TRUE

         The financial system consists of those institutions which help to match one person's saving with another person's investment

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