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5 Cards in this Set
- Front
- Back
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Financial System consists of...
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Financial markets and financial intermediaries, which are locales where savings are converted into investment
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Financial markets and intermediaries are important because...
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1. The enable the efficient use of money by matching borrowers with lenders
2. This boosts investment, leading to economic growth in the long run |
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Lenders/Savers
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1. Households
2. Firms 3. Government 4. Rest of the World |
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Borrower/Spenders
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1. Firms
2. Government 3. Households 4. Rest of the World |
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Flow of funds through the financial system
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Lenders and savers send funds indirectly (through intermediaries, or directly through markets.
Borrowers/spenders receive funds directly from markets or indirectly from intermediaries |
