Investing contributes to economic growth in which of the following ways?(1 point)

Question

Responses

Investor funds are loaned to firms, who use borrowed funds to purchase capital. Funds from investors are used by firms to purchase capital which leads to economic growth.
Investor funds are loaned to firms, who use borrowed funds to purchase capital. Funds from investors are used by firms to purchase capital which leads to economic growth.

Investors earn returns money on their investments, which increases their economic well-being.
Investors earn returns money on their investments, which increases their economic well-being.

Investors pool their funds into financial intermediaries that earn them larger returns. Investors can invest their money into mutual funds to cause economic growth.
Investors pool their funds into financial intermediaries that earn them larger returns. Investors can invest their money into mutual funds to cause economic growth.

Investors diversify their portfolios to minimize risk in the economy. Investors can invest in a bunch of different stocks to minimize their risk which causes economic growth.

Answer 1

Investing contributes to economic growth primarily through the following way:

Investor funds are loaned to firms, who use borrowed funds to purchase capital. Funds from investors are used by firms to purchase capital which leads to economic growth.

This highlights how investments facilitate the acquisition of capital by firms, enabling them to expand operations, innovate, and ultimately contribute to economic growth. While the other options mention aspects of investment such as returns and risk management, the direct link to economic growth is most evident in the utilization of invested funds to enhance productive capacity.