Financial markets are important for bringing equilibrium to the loanable funds market, but do not affect the efficient allocation of scarce resources in the long-run.

Question

Quizplus · Accepted Answer

Financial markets play a crucial role in the efficient allocation of scarce resources in both the short-run and the long-run by directing funds from savers to borrowers, who can then invest in productive ventures.

Financial Markets Are Important for Bringing Equilibrium to the Loanable