Llasus, Ron Arjay S.

1. Explain briefly the agency functions performed by commercial banks.

A. Collection of Cheques, Dividends, and Interests etc. – This agency function rendered by
commercial banks is one of the most important services because banks particularly handle the
instructions and arrangement of dividend, interest, pensions, salaries, bills and other transactions
that relates to money on behalf of its customers.

B. Payment of Subscription, Rent, Insurance Premium etc... – Commercial banks accept the
standing instructions of the customers and handle the arrangements for the payment for personal
expenses, corporate expenses, business expenses etc. to other party and will be charge of small
amount by way of commission for the services.

C. Conduct of Stock Exchange Transactions - Banks purchase and sell various securities such
as shares, debentures, bonds etc. of joint stock companies both private and Government on
behalf of their customers.

D. Acting as Executor, Trustees, Attorneys – Banks act as an executor because they proceed
with the wills of the customers which they execute after their death. They also act like attorneys
because banks signs transfer forms and documents on behalf of their customers.

E. Preparation of Income Tax Returns - Banks prepares income tax returns for their customers
through their tax service departments.

F. Conducting Foreign Exchange Transactions - Commercial banks purchase and sell foreign
exchange for their customers.

G. Salary disbursement – In a corporation which is employing thousands of personnel, the

banks provides services which will help in disbursement of salaries to the employees. The salary
disbursement can be done through bank branches.

2. Who do you think bears the burden to the national debt: the current generation or
future generations? Discuss each case

Among Economist they recognized that a national debt results to inescapable burden to the future
generations. But the national debt is not the actual burden for the future generation rather it’s
from budget deficits that gives rise to a national debt. If the government increases its
expenditures then it will result to increase in aggregate demand which the interest rates will rise
and will make the private sector to reduce their spending.As a result, the private capital stock
inherited by future generations is likely to be smaller and their real income or output will likely
be lower. Thus, the actual burden for the future generation is not the national debt but rather the
reduction in future output of money from private sectors.