Asked by Michael Ariestan on May 12, 2024
Verified
An investment bank is a financial institution that finances federal budget deficits at very low interest rates.
Investment Bank
A financial institution that assists individuals, corporations, and governments in raising financial capital by underwriting or acting as the client's agent in the issuance of securities.
Federal Budget Deficits
The shortfall that occurs when the U.S. government's expenditures exceed its revenues within a fiscal year.
Interest Rates
The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.
- Understand the difference between stock and flow variables within economic analysis, especially when examining national debt and deficits.
Verified Answer
AP
Abhishek PathakMay 13, 2024
Final Answer :
False
Explanation :
An investment bank is a financial institution that helps companies and governments raise capital through issuing and underwriting securities such as stocks and bonds. While the investment banks may participate in the purchase of government bonds through the open market, they do not directly finance federal budget deficits at low interest rates.
Learning Objectives
- Understand the difference between stock and flow variables within economic analysis, especially when examining national debt and deficits.