4.4 The financial sector

Question 1

Role of financial
markets a) To facilitate saving

Question 2

Role of financial
markets
b) To lend to businesses and individuals

Question 3

Role of financial
markets
c) To facilitate the exchange of goods and services

Question 4

Role of financial
markets
d) To provide forward markets in currencies and
commodities

Question 5

Role of financial
markets
e) To provide a market for equities

Question 6

a) Consideration of:
o asymmetric information
o externalities
o moral hazard
o speculation and market bubbles
o market rigging

Question 7

a) Key functions of central banks:
o implementation of monetary policy
o banker to the government
o banker to the banks – lender of last resort
o role in regulation of the banking industry