The Functions Of The Financial System Essay

1838 WordsSep 17, 20168 Pages
Discussion Question 1 Give an example of how each of the six functions of the financial system are performed more efficiently today than they were in the time of Adam Smith (1776). 1. To provide ways to transfer economic resources through time, across borders, and among industries. a. Joe: Online banking, money transfers, and loans allow for funds to be instantly transferred with the click of a mouse. One get research various finance rates, make a decision on a loan for example, and receive the loan without leaving their computer. In 1776 this would have required a physical exchange of money and travel time. b. David Transferring resources is now easier than ever. Over the last decade, companies such as Square and Pay Pal, have made digital transfer accessible to the public at a nominal charge. So much so that perennial giants, such as Western Union, have had to change their business model. c. Jesse: Transfer of economic resources over time and distance has become so easy you don’t even realize you are doing it. When someone had to apply for a loan in the time of Adam Smith, you would have to travel, apply, wait for the approval, collect your money, and make you payments in person, by wire, or by mail. Now you can sit at your computer apply for a loan, be approved, and transfer the money all in one sitting. 2. To provide ways of managing risk. a. Joe: There would have been a lot more risks to consider in 1776 than today. Thinks we take for granted, like in 1776 the

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