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explain, In the realm of economics, savings and investments are critical decisions for households, firms, and governments, with far-reaching financial implications. Households typically save through
explain, In the realm of economics, savings and investments are critical decisions for households, firms, and governments, with far-reaching financial implications. Households typically save through various means such as bank accounts and life insurance policies, amassing savings that often surpass their annual incomes. Similarly, firms accumulate substantial savings through retained earnings, which are used for debt repayment or business investments. However, when business investments exceed retained earnings, firms must seek external funds. Notably, household borrowing, especially for housing among younger households, is significant, nearly matching household savings. Governments also engage in substantial borrowing, as exemplified by the UK government borrowing over 200 billion in 2009. Despite these financial flows' magnitude, modern developed economies heavily rely on financial intermediaries like banks and capital markets to transfer savings to borrowers
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