ECON 1002 Chapter Notes - Chapter 8: Dow Jones Industrial Average, Credit Risk, Commercial Bank

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Chapter 8: saving, investment, and the financial system. Group of institutions in the economy that help to match one person"s savings with another person"s investment. Two categories of financial institutions: financial market, financial intermediaries. Are the institutions through which savers can directly provide funds to borrowers. Stock index: an average of a group of stock prices, dow jones industrial average, s&p/tsx composite index. Because stock prices reflect expected profitability, stock indexes are watched closely as possible indicators of future economic conditions. Financial institutions through which savers can indirectly provide funds to borrowers: the primary function of a bank (e. g. commercial bank) Mutual funds sell shares to the public and uses the proceeds to buy a portfolio of stocks and bonds: allow diversification and access for professional money managers. Saving and investment in the national income accounts. Accounting refers to how various numbers are defined and added up. National accounts include gdp and many related statistics: y=c+i+g+nx, y= gdp.

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