How do financial markets improve economic welfare?

Financial markets are supposed to play some very important roles in a modern economy. 1. Their basic function is to tunnel capital from savers to entrepreneurs and at the same time providing liquidity to the savers. read more

The finance market can be a good indicator of a country's economic health if left to itself. But the governments regularly manipulate and intervene in the market to make it look better, to inflate bubbles and this vastly decouples the market from the real productive economy. read more

Financial markets improve economic welfare because (a) they allow funds to move from those without productive investment opportunities to those who have such opportunities. (b) they allow consumers to time their purchases better. (c) they weed out inefficient firms. (d) they do all of the above. (e) they do (a) and (b) of the above. Answer: E 8. read more