A financial system's primary function is funneling money from:
A) wealthy individuals to non-wealthy individuals.
B) lender-savers to borrower-spenders.
C) borrower-spenders to lender-savers.
D) the government to wealthy individuals.

Question

Quizplus · Accepted Answer

The primary function of a financial system is to facilitate the transfer of funds from lender-savers (ex. banks, investors) to borrower-spenders (ex. individuals, businesses) to support investment and consumption activities. Option A is incorrect because wealth distribution is not a primary function of the financial system. Option C is incorrect because borrower-spenders cannot funnel money to lender-savers without first receiving the funds. Option D is incorrect because the government is not the primary source of funds in the financial system.

A Financial System's Primary Function Is Funneling Money From