Question

Banks and other financial institutions Multiple Choice often hinder economic activity by creating barriers between household savers and firms wanting to invest in capital goods. promote economic growth by helping to direct household savings to businesses that want to invest. lack relevance in the modern economy because they focus primarily on financial assets and generally do not engage in real investment activity. are the primary investors in equipment, factories, and other capital goods.

Answer 1

Banks and other financial institutions promote economic growth by helping to direct household savings to businesses that want to invest.

Step-by-step explanation:

Banks and other financial intermediaries act as a medium to transfer funds from surplus areas to the areas where there is a shortage of funds. It directs savings from households, where it is in surplus to businesses that need funds to invest.

They bridge the gap between those who need funds i.e borrowers and those who supply funds i.e lenders. In this way, they help in the creation of credit and the promotion of economic growth.