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Money is channeled through financial institutions such as banks. A saver saving with a bank account seeks to keep the money in the bank as it earns him interest. A borrower in need of a loan applies for a loan at the bank and if he is eligible, gets the loan at an interest rate. The borrower may chose to use the funds to invest in a business venture and thus be becomes an investor.

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Q: How money is channeled from savers to borrowers to investors?
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Which explains a way banks channel money from savers to borrowers?

Banks lend the money from savings accounts to people who need loans. (Go do your study island instead of looking them up) I'm just kidding. 😂


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consumers (savers) save money. Investors (spenders) spend money. Spending money is what keeps the economy going and money circulating and flowing. If everyone saved money and didn't spend it, then our economy would stop. Credit would dry up, and assets would become illiquid. It is the job of businesses (and some would say the government) to entice savers to invest in new cars, clothes, toothbrushes, etc, etc. When the common opinion of the economy is negative, it becomes harder and harder to convince savers to spend


What is the relationship between lenders and borrowers?

Lenders have something (usually money) that the borrowers want; and the Borrowers have something that the Lenders want (their money back).


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