Question

PLEASE HELP ME THIS IS MY LIFE!!! I WILL GIVE U A MEDAL AND BUDDY U

Answer 1

How government actions can affect how banks operate?

Answer 2

@FMA, @texaschic101. @tester97,@skullpatrol, @DollyAcquah, @El_Primero plz help

Answer 3

It depends on what type of bank it is

Answer 4

Do you have more information like a paragraph if u can

Answer 5

yup more info plz :)

Answer 6

Ok its hard to describe

Answer 7

Now post a question and I can help you,

Answer 8

how government actions can affect how banks operate.

Answer 9

Do you know what a commercail bank is

Answer 10

Yes

Answer 11

The government could affect the eocnomy in multiple ways, but the most common changes that can be made to influence the economy are: (1) Taxes; (2) Import Restrictions; (3) Wholesale Interest Rates; and (4) Government Spending.

TAXES

Taxation understandably affects the economy by redistributing money from consumers and producers to the government coffers. The higher the tax, the less people have to spend, the less aggregate demand [total demand] there is in the economy.

IMPORT RESTRICTIONS

When a country uses protectionism to shield domestic producers from their own inefficiency and inability to compete with foreign firms, they may enact quotas or tariffs. A quota is when there is a maximum amount of a good that can be imported into the country, where imports that exceed the limit have either the responsible parties prosecuted for breaking the law or the goods being turned away. Tariffs are when the price of imports is artificially inflated with a tax, in order to make them less attractive to consumers that are price sensitive. The higher the quotas and tariffs, the higher the prices of those penalised goods in the economy, which in turn will negatively affect aggregate demand.

WHOLESALE INTEREST RATES

Wholesale interest rates are the rates at which the central bank loans out money to retail banks, which in turn loan out their money to consumers and producers at a higher rate (the difference, in a very basic sense, is their profit margin, or revenue minus costs). If the wholesale interest rates are increased, then retail banks must also increase their rates, otherwise their business would become less profitable (or unprofitable). For large purchases, producers (e.g. investments) and consumers (e.g. buying a home) need loans, since they do not have sufficient cash on-hand. Interest rates are effectively the price of borrowing money and hence affects the Consumption and Investment components of GDP (Consumption + Investment + Govt. Spending + Net Exports). (A small caveat, however, that central banks are created by legislation but are not run by government - their actions are independent of politicians' agendas.)

GOVERNMENT SPENDING

Government spending (revenues taken from taxes, mentioned above) creates what is known as the "Spending Multiplier". When the government consumes, called Government Spending, it is demanding goods and services in the economy. However, that demand in turn generates more demand than a single consume, because of not only the size of the demand (the government has a lot more money than you do) but also the type of demand (e.g. building infrastructure benefits everybody, as opposed to building a private mansion); government spending affects aggregate demand. The spending multiplier, or how much additional demand is generated from each dollar of government spending, is calculated as follows: Change in Equilibrium GDP divided by Change in Investment.

Source: http://answers.yahoo.com/question/index?qid=20080829102802AAHMYwx

Answer 12

Ok most commercail banks are insured by FDIC

Answer 13

Maybe this link might help: http://answers.yahoo.com/question/index?qid=20080829102802AAHMYwx

Answer 14

a bank that offers services to the general public and to companies.

Answer 15

thanks for the medal @Goku-Kai :)

Answer 16

Thanks :)

Answer 17

Haha! No problem @DollyAcquah! Me and you think the same!

Answer 18

LOL :D

Answer 19

Ok well thank you all who should I give the medal 2?

Answer 20

It's fine! Give it to @DollyAcquah!

Answer 21

Ok

Answer 22

I'm gone! Bye!

Answer 23

LOL ok bye thanks for the help ;)

Answer 24

@Goku-Kai, you're so nice :)

Answer 25

PLEASE HELP @FMA

Answer 26

a bank that offers services to the general public and to companies.