Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 9

In your spare time, you help out with a magazine for high schoolers that focuses on current events related to economics and politics. While the magazine aims to be readable and entertaining, it also wants to use terminology correctly. Knowing that you've taken an economics class, the editor turns to you to look over a paragraph in a story focusing on the roles of saving and investment after the recent crisis in the housing market. Go through the following paragraph and correct any errors in economic vocabulary, including an explanation for the editor about why the original was incorrect.
When Americans invest by buying securities such as stocks and bonds or putting money in a bank, they provide funds for firms wishing to engage in diversification by buying assets used to produce goods and services. Households with extra money left over after buying things they want or need consume by purchasing securities or putting their funds in savings accounts, and banks help transfer those funds to firms. By matching and working with these borrowers and lenders, banks act as a source of liquidity.