4.4

Question 1

role of financial markets

Answer 1

• saving
• lending
• providing insurance
• facilitate exchange of goods+services
  -provide forward markets
• provide market for equities

Question 2

financial markets

Answer 2

where buyers/sellers buy or trade services or assets that are monetary in value

Question 3

role of central banks

Answer 3

• implementation monetary policy
• gov bank
• deposit money for other banks
• regulations
• prevent financial institutes abusing /risky behaviour

Question 4

market failures

Answer 4

• asymmetric info
• externalities
• speculation + Markey bubble
• market rigging
• moral hazard