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19 Cards in this Set
- Front
- Back
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financial system
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the group of institutions in the economy that help match one person's savings with another person's investment.
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financial markets
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financial institutions through which savers can directly provide funds to borrowers
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bond
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a certificate of indebtedness
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stock
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a claim to partial ownership in a firm
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financial intermediaries
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financial institutions through which savers can indirectly provide funds to borrowers
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mutual fund
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an institution that sells shares to the public and uses the proceeds to buy a portfolio of stocks and bonds
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GDP Formula
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Y = C(onsumption) + I(nvestment) + G(overnment purchases) + NX(Net Exports)
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national saving
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the total income in the economy that remains after paying for consumption and government purchases S = (Y-T-C) +(T-G)
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private saving
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the income the households have left after paying for taxes and consumption
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public saving
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the tax revenue the government has left after paying for its spending
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budget surpluss
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an excess of tax revenue over government spending
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budget deficit
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a shortfall of tax revenue from government spending
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market for loanable funds
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the market in which those who want to save supply funds and those who want to borrow to invest demand funds
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____ is the source of demand for loanable funds
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investment
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_____ is the source of supply for loanable funds
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savings
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a reform of tax law to encourage greater savings would _____ interest rates and ______ investment
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lower, raise
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a reform of the tax law to encourage greater investment would _____ interest rates and ______ investment
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raise, raise
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crowding out
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a decrease in investment that results from government borrowing
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government budget deficits make interest rates ________ and investment ________, thereby ________ing the economy's growth
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rise, fall, slowing
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