Question:
Financial market allocates or directs funds available for investment into the most productive investment opportunity. In doing so, it performs the ____________________________ function.
Financial market allocates or directs funds available for investment into the most productive investment opportunity. In doing so, it performs the ____________________________ function.
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The allocative function of the financial market involves directing funds to the most productive uses, which supports economic growth.
Updated On: Feb 19, 2025
- Creative
- Exchange
- Allocative
- Productive
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The Correct Option is C
Solution and Explanation
The correct answer is Allocative. In financial markets, funds are allocated or directed to the most productive investment opportunities. This allocation function ensures that capital is distributed efficiently to support economic growth and investment in productive ventures.
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