The financial system refers to the:
A) mechanism that transfers wealth from consumers to corporations.
B) institutions that facilitate the flow of funds between savers and investors.
C) arrangements that allow money to circulate in the economy.
D) government regulations that govern the terms of borrowing and lending.

Question

Quizplus · Accepted Answer

The financial system includes institutions such as banks, stock exchanges, and investment funds that enable the transfer of funds between savers (i.e. households and businesses) and investors (i.e. corporations and governments). It also includes financial instruments such as stocks, bonds, and derivatives that allow for the flow of funds. The financial system is crucial for the efficient allocation of resources in an economy. Choices A, C, and D do not accurately describe the financial system.

The Financial System Refers to The