Asked by Jacob Lovins on Jul 12, 2024
Verified
Financial markets are important for bringing equilibrium to the loanable funds market, but do not affect the efficient allocation of scarce resources in the long-run.
Financial Markets
Marketplaces where individuals and entities can trade financial securities, commodities, and other fungible assets.
Loanable Funds Market
A theoretical market where borrowers and lenders negotiate interest rates for loans, which determines the supply and demand for credit in the economy.
Scarce Resources
Refers to the limited availability of resources that are used for the production of goods and services; scarcity necessitates the need for allocation decisions.
- Explain the role of financial markets in allocating resources and achieving market equilibrium.
Verified Answer
Learning Objectives
- Explain the role of financial markets in allocating resources and achieving market equilibrium.
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