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Why are banks redundant in a simple Arrow-Debreu economy? a. Because markets are incomplete and hence financial markets can perform the same functions as banks
Why are banks redundant in a simple Arrow-Debreu economy?
a. Because markets are incomplete and hence financial markets can perform the same functions as banks b. Because interest rates are assumed to be the same across securities and hence there is no difference between market securities and deposits c. Because banks make zero profits, and hence they cannot survive in such an economy d. None of the above justifies the redundancy of banks in such an economy
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