Financial Services and Asset Management Quiz
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Questions and Answers

What is the financial intermediation process known as when funds are channeled through financial institutions?

  • Market-based finance
  • Capital investment
  • Direct finance
  • Indirect finance (correct)
  • Which of the following statements is true about indirect finance?

  • It involves direct lending between two parties.
  • It involves a financial intermediation process through institutions. (correct)
  • It bypasses financial institutions.
  • It promotes economic growth but does not involve financial intermediaries.
  • How does the financial system benefit the side with a surplus of funds?

  • By providing investment opportunities (correct)
  • By generating profits through investments
  • By reducing savings interest rates
  • By promoting economic growth
  • What is the primary benefit of new investments according to the text?

    <p>Increasing the level of total output (GDP)</p> Signup and view all the answers

    In the circular flow of expenditures and income, what does GDP stand for?

    <p>Gross Domestic Product</p> Signup and view all the answers

    Which route involves a direct connection between savers and borrowers without any intermediary?

    <p>Direct finance</p> Signup and view all the answers

    What role do financial intermediaries play in indirect finance?

    <p>They facilitate the financial intermediation process.</p> Signup and view all the answers

    How do market-based finance systems differ from indirect finance systems?

    <p>Market-based systems involve more financial intermediaries.</p> Signup and view all the answers

    What effect do new investments have on the economy according to the text?

    <p>They increase the level of total output (GDP).</p> Signup and view all the answers

    What is the primary function of financial institutions in the economy?

    <p>To channel funds and provide investment opportunities.</p> Signup and view all the answers

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