ECON 1BB3 Lecture Notes - Lecture 4: Loanable Funds, Demand Curve, Autarky

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: O

Document Summary

Unit 4: the canadian financial system bringing together savers & borrowers. Canada"s financial institutions financial market & intermediaries. Purpose of both financial institutions is to bring together savers & borrowers. Purchasing stocks and bonds is not considered investment in the language of economics it is something households do with accumulated savings. 1: savings = investment, savings = investment unless net exports are positive, the dollar value of stocks purchased by households equals the dollar value of bonds issued by firms, savings - investments = consumption. All borrowing is done by firms for investment. All saving is done by households and governments. Sp + sg causes supply curve to shift (change in private saving or change in public saving) Change in i (investment) shifts demand curve. If interest rate goes up, quantity supplied increases. Investment spending is buying new capital goods: company is planning to make a new factory, and then interest rates suddenly increase.