Financial markets are, in the larger scheme of the economy are not important

Economics Dec 23, 2020

Financial markets are, in the larger scheme of the economy are not important.

True

False

Depends

Expert Solution

Answer: False

Financial markets are immensely important in an economy. They are the way that savers and investors interact. They allow savers to loan out resources they aren't using efficiently to someone who will use them efficiently and thus help grow the economy. Without financial markets, economic growth would be far lower as you would have to save up capital to innovate and thus this slows slows innovation and economic growth.

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