Final Answer:
The primary function of financial institutions in an economy is D. provide access to capital for people and businesses.
Step-by-step explanation:
Financial institutions serve as intermediaries connecting individuals and businesses with the necessary capital. They facilitate this by offering various financial services like loans, mortgages, and investment vehicles. By pooling funds from savers and channeling them to borrowers, these institutions ensure a steady flow of capital in the economy. For instance, banks provide loans to businesses for expansions or startups, enabling economic growth.
Moreover, financial institutions play a pivotal role in managing risks associated with lending and investment. They assess creditworthiness, create diversified portfolios, and use various financial tools to mitigate potential losses. Calculations aren’t necessary to explain this function, but it's important to note that these institutions manage risks to maintain stability and trust in the financial system.
Lastly, financial institutions contribute to the overall economic stability and development. They facilitate efficient allocation of resources, encourage savings and investment, and provide liquidity in the market. This fosters economic growth by ensuring that capital is available where it’s needed most, thus positively impacting employment, productivity, and innovation. Overall, the function of providing access to capital is fundamental to the role of financial institutions in supporting the economy's vitality.