Explain how a stock exchange could encourage economic growth.

A stock exchange enables firms to raise finance by issuing shares by providing a market for shares. This enables shares to be bought and sold finance allows firms to invest which increases their ability to produce more

A stock exchange helps firms merge enabling firms to take greater advantage of economies of scale reducing costs of production increasing international competitiveness capturing more market share

If stock exchange is doing well wealth, dividends may rise to cause higher spending

It allows sales of government bonds and securities. Money raised can be spent on e.g. infrastructure