Question

1. Why are financial markets (the bond market, the stock market, and the foreign exchange market) important to the economy

Answer 1

Financial markets are important for a economy for various reasons. These include:

1. They are important because they change savers into investors.

Step-by-step explanation:

The savers money is withdrew from the economic cycle, hence making the economic growth passive. These instruments help the savers to earn more from what they save rather than just to hoard it. Hence savers become investors.

2. It helps to fund a project.

Step-by-step explanation:

To build a big project, high funding is required to build it, these instruments help investors to pool their funds on projects, make it, and then help them earn from it. These are the professionals that help you invest smartly.