Answer to Question #102949 in Macroeconomics for Michael

Question

Which one of the following statement is incorrect regarding financial institutions in the circular flow of income and spending

1. Financial capital flows into the financial institutions from households and firms
2. Financial institutions include Banks and insurance companies
3. The money, which households and firms provide to financial institutions, is called savings.
4. The role of financial institutions in the economy is to buy factors of production from households

Answer 1

4 is incorrect