Question

Q. 1. How does Financial System Coordinate Saving and Investment? Explain in detail.

Answer 1

Answer:

Banks play a very important role in the economy

Explanation:

The role of financial institutions is to coordinated investment and savings in the economy. The financial system comprises of numerous institutions in the economy that help to coordinate one individual's saving with another person's investment. It is a system that arranges the economy's saving and investment – it concerns choices we make today that will influence our lives in future.  

Banks are financial institutions which play a pivotal role by playing a critical role in the monetary framework and the economy. As a key part of the financial system, banks allocate assets from savers to borrowers in a proficient way. These financial administrations of banks help to make the economy efficient by generating money in the country.

The T account is a graphical representation of general ledger account it is a crucial method that indicates how one side of an accounting exchange is reflected in another record. T-accounts are also used in income statements.

Assets                         Liabilities        Equity

Debit Credit Debit Credit Debit Credit

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