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Classify each of the scenarios as an example of interacting directly with a financial market.

A) Buying government bonds
B) Paying taxes
C) Opening a savings account
D) None of the above

User Carlton
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1 Answer

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Final answer:

Buying government bonds is an example of direct interaction with a financial market. Paying taxes and opening a savings account are not direct interactions with the market as they involve mandatory payments to the government and dealings with financial intermediaries, respectively.

Step-by-step explanation:

When classifying activities as instances of interacting directly with a financial market, it is important to understand what constitutes a financial market interaction. The only scenario listed that qualifies as interacting directly with a financial market is Buying government bonds. This is because when you purchase government bonds, you are directly engaging with the market by lending money to the government in exchange for the bond, which pays interest over time.

Paying taxes, on the other hand, is not directly related to financial markets; it is a mandatory payment to the government and does not involve a choice to invest. Similarly, opening a savings account involves interacting with a financial intermediary, in this case, a bank, which then may interact with financial markets on your behalf using your deposits.

In summary, choice A (Buying government bonds) stands as the correct option for an example of direct interaction with a financial market. Choices B (Paying taxes) and C (Opening a savings account) do not fit the criteria for direct interaction with financial markets.

User Vuk Bibic
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