4. 1 Role Of Financial Markets

Question 1

Role of financial markets in the wider economy?

Answer 1

1. To facilitate saving by business + households
2. Lend businesses and individuals
3. Facilitate exchange rate of goods + services
4. Provide forward markets in currencies and commodities
5. Provide a market to equities

Question 2

What does it mean to facilitate savings by business + household?

Answer 2

• close the savings gaps and can transfer spending power from the present to the future

Question 3

Advantages of lending businesses and individuals

Answer 3

• encourage enterprise - help emerging economies grow
• investment by firms
• spending for consumer