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

Question

Responses

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.

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 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

The most relevant contribution of investing to economic growth from the provided options is:

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 statement accurately describes how investment contributes to economic growth by allowing firms to acquire the capital necessary to expand operations, hire more workers, and ultimately increase productivity and output, driving overall economic growth.