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1. Financial intermediaries are necessary because Obesides depositing money into a financial intermediary such as a bank there is no other way to save money Oin many cases, people who want to save don't interact directly with people who want to borrow. Owithout financial intermediation too much saving and borrowing would occur in the economy Oprospective borrowers worry about providing financial information directly to people with money to lend. 2. Banks attract savings from many depositors by. Ooffering loans at low interest rates Oproviding nudges that encourage saving. Oadvertising their security measures. Opaying interest on deposits. 3. How do banks earn a profit? OBy charging a higher interest rate on the money they lend than they pay on the money they receive, OBy charging a lower interest rate on the money they tend than they pay on the money they receive By charging fees for checking accounts and dosing costs on loans. By investing the money they receive from depositors with other banks