The reduction in transactions costs brought about by financial intermediaries benefits
A)small savers, but not small borrowers.
B)small borrowers, but not small savers.
C)both small savers and small borrowers.
D)society through greater economic efficiency; small savers and borrowers do not gain directly.

Question

Quizplus · Accepted Answer

The reduction in transactions costs benefited both small savers and small borrowers. Financial intermediaries allow small savers to pool their funds and invest in larger, more diversified portfolios that typically offer greater returns than investing in individual securities. Meanwhile, small borrowers can access cheaper credit through financial intermediaries, which can negotiate better interest rates and terms on loans due to their large scale and expertise. This results in greater economic efficiency for society as a whole.

The Reduction in Transactions Costs Brought About by Financial Intermediaries