ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Financial market is a link between savers and the borrowers; a financial market helps to establish a link between savers and the investors by mobilising funds between them.

Detailed explanation-2: -Banks as Financial Intermediaries Banks act as financial intermediaries because they stand between savers and borrowers. Savers place deposits with banks, and then receive interest payments and withdraw money. Borrowers receive loans from banks and repay the loans with interest.

Detailed explanation-3: -market acts as an important link between savers and investors. The savers are lenders of funds while investors are borrowers of funds. The savers who do not spend all their income are called “Surplus units” and the investors/borrowers are known as “deficit units”.

Detailed explanation-4: -Answer and Explanation: Security markets link businesses and investors. In other words, businesses and investors are brought together in security markets where securities like shares are traded.

Detailed explanation-5: -Monetary policy and financial markets are intrinsically linked. Central banks conduct monetary policy by directly and indirectly influencing financial market prices.