ECN 506 Study Guide - Mortgage Loan

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Money has always been at the center of economic transactions-from the days of gold and silver to make purchases to today"s payments with plastic cards. No longer constrained by physical proximity, money flows around the globe through banking institutions and financial markets. This seemingly free flow of money is constrained, however, by rules under which banks and financial markets must operate, as dictated by government policy. In this chapter we will see how these policy decisions affect consumers, households, and businesses the primary exchangers of money. Economic policy determines the rules and regulations by which banks work. If these rules are poorly designed, the banking system will not work well. For example, with efficient rules for banks, the interest rate on a car loan might be 7%, but if inefficient rules raise banks" costs of making loans, the interest rate might be 10% The book covers a wide variety of topics.

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