Which of the following observations concerning the intermediation approach is true?
A)The intermediation approach views FIs' outputs of services as having two underlying inputs.
B)Labour and capital are the only inputs.
C)The intermediation approach views the output as being produced by labour, capital and the funds used to produce intermediated services.
D)Premiums or reserves are viewed as an input in the banking and thrift industries.

Question

Quizplus · Accepted Answer

The intermediation approach views the output of financial institutions as being produced by labour, capital and the funds used to produce intermediated services. This means that the funds deposited with financial institutions are viewed as an input in the production process, alongside labour and capital. Options A and D are incorrect because they do not reflect the full range of inputs considered under the intermediation approach. Option B is incorrect because it is too narrow, excluding the role of deposited funds as an input.

Which of the Following Observations Concerning the Intermediation Approach Is