Question

explain the intermediary funtionbof money in the bank by depositors

Answer 1

Banks plays a role of intermediate between depositors and borrowers . Outside the banks its difficult to borrow money from unofficial sources, as they may charge more interest . Bank deposits the money of depositors and keep 15% with them of it to give someone who might come to withdraw their money and use the second part to give it as loans to the people who need it. By this banks act as an intermediate between depositors and borrowers.

Answer 2

Answer:

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Explanation:

Money by providing the crucial intermediate step eliminates the need for double coincidence of wants. It is no longer necessary for the shoe manufacturer to look for a farmer who will buy his shoes and at the same time sell him wheat. All he has to do is find a buyer for his shoes. Once he has exchanged his shoes for money, he can purchase wheat or any other commodity in the market. Since money acts as an intermediate in the exchange process, it is called a medium of exchange.