ECN 204 : Chapter 8.docx

• School: Ryerson University
• Department: Economics
• Course: ECN 204
• Professor: Christos Shiamptanis

Document Summary

Chapter 8: saving, investment, and the financial system. Financial system - institutions in ecn match one person"s savings w/ another person"s investment. Long-run ecn growth - save gdp --> more resources for investment in capital --> higher capital raises country"s productivity and living stds. Financial system - moves the ecn scarce resources from savers (spending < earning) to borrowers (spending > earning) savers - supply $ with expectation will get it back w/ interest. Borrowers - demand $ with knowledge will pay it back with interest. Financial markets financial markets - savers can directly provide funds to borrowers. The bond market: bond - certificate of indebtedness specifies obligations of borrower to the holder of the bond. Date of maturity - time repaid and rate of interest paid periodically. Principle - amt borrowed: term - length of time until the bond matures.