How do depository institutions create liquidity, pool risks, and lower the cost of borrowing?

A depository institution creates liquidity by $$

A$.$ paying high interest rates on deposits

B$.$ eliminating high$-$risk loans

C$.$ borrowing short and lending long

D$.$ borrowing long and lending short

Depository institutions pool risk by using funds obtained from $$ depositors to make loans to $$ borrowers.

A$.$ many; fow

B$.$ many; many

C$.$ few; many

D$.$ few; few

Depository institutions minimize the cost of monitoring borrowers by $$

$6$

$7$

B$.$ threatening and enforcing foreclosure on bad debts

C$.$ hiring collection agencies and using them when two payments on a loan are missed

D$.$ making loans only to households with income that falls within a specified range