Final answer:
The statement is true; the financial system effectively matches savings with investments through various financial institutions such as banks and insurance companies, which play a pivotal role in the economy's capital formation and growth.
Step-by-step explanation:
The statement that the financial system consists of the institutions that help to match one person's saving with another person's investment is true. Financial systems are essential for channeling savings from individuals or businesses that have excess funds to those in need of funds to engage in productive investments.
This includes a wide array of institutions, like banks, insurance companies, and stock markets. These institutions provide the services that facilitate the transfer of funds between savers and borrowers, ensuring the effective functioning of the economy.
Banks and financial institutions serve both borrowers and savers, making it possible to save money in a secure location, and they take into account factors like credit scores when lending money. The availability of savings in an economy is critical for capital formation and economic growth, as it allows for investments in businesses and helps to fund major purchases for individuals.