Figure 2-3 -Refer to Figure 2-3.Which of the Following Is an Activity

question 82

Multiple Choice

Figure 2-3
-Refer to Figure 2-3.Which of the following is an activity undertaken by the actors in rectangle 2?

• A)produce and sell goods and services
• B)hire and use factors of production
• C)own and sell factors of production
• D)exchange goods and services between firms and households

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Definitions:

Financial Intermediation

A process where financial institutions serve as intermediaries between savers and borrowers, facilitating the flow of funds in the economy.

Intermediaries

Entities that act as middlemen in transactions, facilitating trade between buyers and sellers without owning the product.

Index Funds

Index funds are investment funds that replicate the portfolio of a specific index, aiming to achieve similar returns to the index they track.

Credit Risk

The potential for loss due to a borrower's failure to make payments on any type of debt.