Role of Financial Institutions in an Economy
Saving and investment play a major role in the growth of the economy.
All societies depend on individual and business saving and investment to provide
the capital (start up money) needed to begin, expand, and modify businesses in
the private sector. Only with the growth of businesses can increased
consumer demands be met. As the money circulates in an economy, the act of
saving and investing is essential to healthy economic growth. Individuals
that own the resources, sell the resources and use the income to purchase
products or save or invest. The act of saving and investing provides the
resources for producers to make products that are sold to individuals and make
profits for themselves which they either use to buy more resources or save or
invest.
In the public sector, government uses tax revenues to provide public goods
and services
The U.S. Treasury Department
The Federal Reserve
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