ECON 1010 Study Guide - Midterm Guide: Loanable Funds, Frictional Unemployment, Tax Credit

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4 Feb 2014
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Chapter 8 saving, investment and the financial system. Financial system the group of institutions in the economy that help to match one person"s savings with another person"s investment. Financial markets financial institutions through which savers can directly provide funds to borrowers. The most important ones in our economy are the bond and stock markets. Bondholders only receive their interest back as well as their principle. If company gets into trouble, bondholders are paid before shareholders. The owner of a share" is a part- owner. Shareholders can reap the benefits and harms of being a part-owner, including a share of the profit: stock index an average of a group of stock prices. These monitor the overall level of stock prices. (ex: dow jones industrial average or s&p/tsx composite index) Financial intermediaries financial institutions through which savers can indirectly provide funds to borrowers. The most important ones are banks and mutual funds.