Asked by Roberta Carubia on Jul 16, 2024
Verified
Thrift institutions encountered serious difficulties in the 1970s because:
A) money market mutual funds became serious competitors for their deposits.
B) the U.S.Treasury deposited larger sums of money than the thrift institutions could effectively manage.
C) the interest rates they had to pay on deposits began to fall.
D) each of the largest banks increased the pressure on the thrifts by building a nationwide network of branch banks.
E) the FDIC increased the reserve requirement for thrifts.
Thrift Institutions
Savings banks and credit unions; depository institutions that historically lent money to households.
Money Market Mutual Funds
Investment funds that invest in short-term, high-quality debt securities and aim to offer returns with minimal risk, providing investors with liquidity and a modest income.
Difficulties
Challenges or obstacles that may impede progress, require problem-solving, or necessitate adaptation.
- Acknowledge the importance and impact of money market mutual funds in contention with traditional banks.
Verified Answer
AC
Alsopher ChangJul 16, 2024
Final Answer :
A
Explanation :
Money market mutual funds became serious competitors for thrift institutions' deposits, reducing their ability to attract funds and causing difficulties for them in the 1970s.
Learning Objectives
- Acknowledge the importance and impact of money market mutual funds in contention with traditional banks.