If Financial Markets Didn't Exist

question 65

Multiple Choice

If financial markets didn't exist:

• A)Required returns would be lower since fewer instruments would trade
• B)Liquidity would diminish and returns would be lower
• C)More funds would flow directly between borrowers and savers
• D)Liquidity would diminish, reducing the flow of funds between borrowers and savers

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Definitions:

Leisure Time

Time that an individual can spend at their own discretion, not occupied by work or domestic responsibilities.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to replace more expensive items with less costly alternatives.

Higher Wage

Refers to an increase in the amount of money that an employee receives for performing one hour or another standard unit of work.

Leisure Time

Free time that an individual can spend away from work, chores, and other compulsory activities, often used for relaxation or hobbies.