Final answer:
Intermediaries or middlemen, particularly banks as financial intermediaries, increase the efficiency of distribution channels by reducing transaction costs and facilitating transactions between savers and borrowers.
Step-by-step explanation:
Intermediaries, often referred to as middlemen, play a crucial role in the efficiency of distribution channels. Their presence increases the efficiency of the system by lowering transaction costs and facilitating the flow of goods and services.
Specifically, financial intermediaries like banks are imperative as they lower transactions costs and act as a bridge that brings savers and borrowers together, making it easier and safer for economic transactions to occur.
By storing savers' money and providing loans to borrowers, banks enhance the circular flow of economic activity. They also contribute significantly to the creation of money within the economy.
The role of banks as financial intermediaries also includes being a critical component of the payment system, which underpins trade in goods and services for money or other financial assets.
Therefore, in the context of the question, the correct answer is that intermediaries/middlemen a. Increase the efficiency of the distribution channel.