Financial intermediaries:
A) reduce the costs of moving savings from savers to borrowers and investors.
B) have liabilities that exceed their assets.
C) are inefficient middlemen,raising the cost of economic activity.
D) profit by keeping resources in their least valuable uses.

Question

Quizplus · Accepted Answer

Financial intermediaries, such as banks, reduce the costs of moving savings from savers to borrowers and investors by pooling deposits from multiple savers and using those funds to make loans or investments. This allows smaller savers to access the benefits of investing in larger projects or loans that would otherwise be out of reach, while also providing borrowers with more affordable financing than they might be able to secure directly from investors.

Financial Intermediaries