Describe two ways in which financial intermediaries help lower transaction costs in an economy.

Question

Describe two ways in which financial intermediaries help lower transaction costs in an economy.
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Solution 1

Financial intermediaries play a crucial role in the economy by reducing transaction costs in two main ways:

  1. Economies of Scale: Financial intermediaries, such as banks or credit unions, handle a large volume of transactions. This allows them to take advantage of economies of scale, which means t Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob
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Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
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