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How It's Displayed In The Circular Flow Diagram

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How It's Displayed In The Circular Flow Diagram

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Households save their earnings and transfer their savings into the bank. The bank then lends the money to the investors who are willing to invest or start a business. The money can also be lent to people wanting to buy a house, pay for tuition or for other personal advancements.

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Good work. Add more discussion and diagrams

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The investment sector helps indiviuals and businesses use their savings and other financial assests to make a profit and generate an income. The types of assests managed can include;
- Stocks and shares (owning a portion of a company)
- Bonds (a loan in which an investor provides money to a government or company and recieves interest).
- Foreign exchange (investing in currency fluctuations)
- Property (Residential and commercial)

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For an economic system to grow, there must be both an equal balance of saving and spendings. People must save so that banks can lend the money to those that need to borrow it to buy things such as cars, homes or pay for tuition.

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This sector consits of all those institutions that are enadged in the borrowing and lending of money,acting as the intermediaries between those who save and borrowers of money. It's needed for individuals and firms to be able to undertake saving and investment.