The financial markets play an important role in channeling funds from savers to borrowers. Which of the following illustrates this function of financial markets?(1 point)

Question

Responses

Investors deposit funds into interest-bearing accounts which are then loaned to borrowers.
Investors deposit funds into interest-bearing accounts which are then loaned to borrowers.

Investors purchase securities stocks that are issued by firms and governments.
Investors purchase securities stocks that are issued by firms and governments.

Investors purchase assets like real estate and gold from other investors.
Investors purchase assets like real estate and gold from other investors.

Investors purchase capital goods which are used in production by borrowers. Investors withdraw money from their savings accounts.

Answer 1

The response that best illustrates the function of financial markets in channeling funds from savers to borrowers is:

Investors deposit funds into interest-bearing accounts which are then loaned to borrowers.

This option clearly shows the process of savers providing funds (through deposits) that are then used by financial institutions to lend to borrowers, thus facilitating the flow of capital in the economy.