50) 50 51) 52) 50) Financial intermediation is best defined as the process by which A) liabilities are liquidated. B) corporations issue new stock. C) financial institutions accept savings from savers and make loans to investors. D) inflation is controlled. 51) A business owner applies for a bank loan to launch a fairly low-risk project. After receiving the loan, she cancels the low-risk project and instead uses the borrowed funds for a high-risk venture. This is an example of A) capital controls. C) financial intermediation. B) the transactions approach. D) moral hazard. 52) Which of the following is not a function of the Federal Reserve System? A) The Fed determines government spending and taxation policies. B) The Fed supplies the economy with fiduciary currency. C) The Fed holds reserves of depository institutions. D) The Fed acts as fiscal agent for the United States Department of the Treasury. 53) It can be argued that the Federal Reserve's most important function is A) to provide for check collection and clearing. B) to regulate the money supply. C) to lend to risky customers. D) to set the legal, controlled consumer interest rates. 53)