ECN 204 Chapter Notes - Chapter 8: Government Debt, Virtuous Circle And Vicious Circle, Loanable Funds
Document Summary
The financial system: the group of institutions that helps matches the saving of one person with the investment of another. Financial markets: institutions through which savers can directly provide funds to borrowers. A bond is a certificate of indebtedness. A stock is a claim to partial ownership in a firm. Financial intermediaries: institutions through which savers can indirectly provide funds to borrowers. Mutual funds institutions that sell shares to the public and use the proceeds to buy portfolios of stocks and bonds. Saving and investment in the national income accounts: Recall that gdp is both total income in an economy and total expenditure on the economy"s output of goods and services: =the portion of households" income that is not used for consumption or paying taxes. Measure of income is disposable income, or gross income minus taxes ( take-home pay ) the measure of expenditure is consumption.
