ECON 314 Lecture Notes - Lecture 22: Stock Market, Imperfect Competition, Fiscal Policy
27 Mar 2018
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15. 3 )nformal finance and the rise of microfinance (cid:523)cont"d(cid:524: some argue that microfinance is the problem. The problem is defined by some as credit made available to lower income individuals (should use that credit to develop themselves). Figure 15. 1 the effects of interest-rate ceilings on credit allocation. Interest rate diverted to firms in the area of exports the supply misallocation of funds: demand for funds and supply for funds, financial repression is wrong. Financial markets always ration credit: the moment you"re outside of equilibrium, issue of who is going to receive, (cid:883)(cid:524) financial markets don"t function this way (cid:523)demand/supply(cid:524). Book: governments: don"t allow consumers to borrow and whatever is available is. Dissavor (someone who borrows money to spend) 20 -30% -6000. Savings rate of economy(aggregate savings of economy) is therefore 10,000 saving. How did we get 16,0000 (20/100) times 80 times 1000. How did we get -6,0000 (30/100) times 20 times 1,000$ = -6,000.
