Question

Select the correct answer from the drop-down menu.

One way in which financial institutions contribute to the development of a market economy is by
(Charging interest rate on loans they approve, setting tax rates on retirement accounts and investments, making loans to businesses and consumers, imposing tariffs on consumers purchases)

Answer 1

Financial institutions contribute to the development of a market economy by making loans to businesses and consumers.

Step-by-step explanation:

The correct answer is: Making loans to businesses and consumers.

Financial institutions contribute to the development of a market economy by providing loans to businesses and consumers. These loans enable businesses to invest in expansion and innovation, which stimulates economic growth. Similarly, loans to consumers provide them with the means to make purchases, increasing demand and driving economic activity.

For example, a bank may provide a loan to a small business to finance the purchase of new equipment. This allows the business to increase productivity and generate more revenue, leading to job creation and overall economic development.

Answer 2

making loans to businesses and consumers

Step-by-step explanation:

One way in which financial institutions contribute to the development of a market economy is by "making loans to businesses and consumers"

This is because the loans to businesses will help the businesses to produce or make available demanding goods and services to the consumers.

Also, the loans to consumers will help the consumers to quickly make purchases at the point of sale without necessarily dipping their hands into other people's money.