Question

1. What is the connection between savers and investors? Can one survive without the other? 2....

1. What is the connection between savers and investors? Can one survive without the other?

2. If you had to explain the financial system to a group of middle school students, how would you boil it down for them without losing their attention?

3. Describe some reasons as to why the general public is not fluent or aware of the importance of investments and the financial system. What can we do as a society to improve in this regard?

Homework Answers

Answer #1

1. There is a very significant relationship between savers and investors which help in the smooth function of the financial market. Savers save money which is mobilized by financial institutions such as banks. Investors get access to this money from the financial institutions in the form of credit and make an investment in the market. Savers earn interest from their savings. Investors pay interest to the financial institutions to get the credit. Therefore, savers and investors are dependent on each other. Without the investors, there will be no demand for the money of the savers and the savers will not earn any interest. On the other hand, without the savers, investors will not have any funds to invest.

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