Most US banks are privately owned, profit-making organizations. Although they provide a service just as many other businesses, banks differ because of their importance in the macroeconomy. Policymakers have debated whether banks should be permitted only do to banking business, or whether banks should be permitted to engage in other lines of business such as selling insurance or buying and selling stocks and bonds. What are the risks for the macroeconomy if a bank fails that do not exist for other businesses? If banks could participate in other lines of business what benefits would there be for consumers? Overall, should banks be allowed to enter other lines of business?
Most US banks are privately owned, profit-making organizations. Although they provide a service just as many other businesses, banks differ because of their importance in the macroeconomy. Policymakers have debated whether banks should be permitted only do to banking business, or whether banks should be permitted to engage in other lines of business such as selling insurance or buying and selling stocks and bonds. What are the risks for the macroeconomy if a bank fails that do not exist for other businesses? If banks could participate in other lines of business what benefits would there be for consumers? Overall, should banks be allowed to enter other lines of business?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Most US banks are privately owned, profit-making organizations. Although they provide a service just as many other businesses, banks differ because of their importance in the macroeconomy. Policymakers have debated whether banks should be permitted only do to banking business, or whether banks should be permitted to engage in other lines of business such as selling insurance or buying and selling stocks and bonds. What are the risks for the macroeconomy if a bank fails that do not exist for other businesses? If banks could participate in other lines of business what benefits would there be for consumers? Overall, should banks be allowed to enter other lines of business?
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