Rubric for FRQ 1 (6 points)
1 point: Decrease transaction costs
1 point: A well-functioning financial system facilitates investment spending by allowing companies to borrow large sums of money without incurring large transaction costs.
1 point: A well-functioning financial system helps people reduce their exposure to risk, so that they are more willing to engage in investment spending in the face of uncertainty in the economy.
1 point: Provide liquidity
1 point: A well-functioning financial system allows the fast, low-cost conversion of assets into cash.