Which of the following is a service of depository institutions?
A) loaning funds to other depository institutions at the discount rate
B) monitoring the Federal Reserve
C) creating liquidity
D) decreasing the liquidity drain in the banking system

Question

Quizplus · Accepted Answer

Creating liquidity is a key service provided by depository institutions, as they accept deposits from customers and use these funds to make loans and investments, thus increasing the overall money supply and facilitating economic activity. The other options are not services provided by depository institutions - loaning funds to other institutions at the discount rate is a function of the Federal Reserve, monitoring the Fed is not a service provided to customers, and decreasing the liquidity drain in the banking system is not a specific service provided by depository institutions.

Which of the Following Is a Service of Depository Institutions