Answer to Question #131434 in Macroeconomics for Zama

Question #131434

In the circular flow of income and spending, financial institutions …
[1] act as an intermediary between those who have surplus funds and those who have
deficit funds.
[2] are not always useful, as households generally spend all their available funds.
[3] create an injection into the flow by collecting savings from participants with surplus
units only; therefore, there is no need to provide funds to deficit units.
[4] generally exist to collect investment spending and transform it into savings.

Expert's answer

[1] act as an intermediary between those who have surplus funds and those who have

deficit funds.