ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Financial markets play a vital role in facilitating the smooth operation of capitalist economies by allocating resources and creating liquidity for businesses and entrepreneurs. The markets make it easy for buyers and sellers to trade their financial holdings.

Detailed explanation-2: -Answer and Explanation: The main function of financial markets is to facilitate the transfer of funds from those who are in excess of funds to those who are in need of funds. This leads to an efficient allocation and optimum utilization of resources. This further increases the economic growth.

Detailed explanation-3: -The well developed and smoothly operated financial market plays a major important role in the growth and efficiency of a country. It helps in the efficient direct flow of savings and investments in the economy which facilitates the accumulation of capital and contribution in the production of goods and services.

Detailed explanation-4: -Financial markets that are doing well allow capital to be channeled to the most efficient uses possible. It will stimulate growth if funds are used in the most effective way possible. A high rate of growth has an impact on all aspects of the economy and, as a result of spillover effects, reduces poverty.