The main role of banks in the nation's economy is to:

• A. set government fiscal policy
• B. facilitate the flow of funds between savers and borrowers
• C. regulate international trade agreements
• D. determine the level of national output

Answer: (B)

Verified step by step guidance

1. Understand the role of banks in the economy: Banks act as financial intermediaries, meaning they connect those who have excess funds (savers) with those who need funds (borrowers).
2. Recognize that banks do not set government fiscal policy; this is the role of the government through taxation and spending decisions.
3. Note that regulating international trade agreements is typically handled by government agencies or international organizations, not banks.
4. Understand that determining the level of national output is influenced by many factors including government policy, consumer behavior, and business investment, but banks primarily influence this indirectly through credit availability.
5. Conclude that the main role of banks is to facilitate the flow of funds between savers and borrowers, enabling efficient allocation of resources in the economy.