Final answer:
The financial intermediary that specializes in making small loans to households is finance companies, which offer direct loans and purchase installment contracts from merchants. Option D is correct.
Step-by-step explanation:
The question asks which financial intermediary specializes in making small loans to households. Among the options provided, finance companies are the ones that specialize in making loans directly to consumers.
Finance companies, such as those associated with automobile manufacturers or car lots, offer loans to customers who are purchasing high-cost items on an installment plan. They buy installment contracts from merchants, allowing the merchant to receive a lump sum instead of waiting for the customer to pay off the item over several years.
Banks are also financial intermediaries and offer a variety of accounts, including checking and savings accounts, as well as certificates of deposit. However, banks are not the choice in this context because they tend to offer a wider range of financial services and might not specialize in the type of small consumer loans described in the question.
To recap, the financial intermediary that specializes in making small loans to households is d. finance companies.