ECON 2 Chapter Notes - Chapter 26: Financial System, Tax Credit, Loanable Funds
Document Summary
Chapter 26: saving, investment, and the financial syst. Group of institutions in the economy that help to match one person"s saving with another person"s investment b. (26. 1) financial institutions in the u. s. economy i. ii. Financial system moves the economy"s scarce resources from savers to borrowers (26. 1a) financial markets. Financial institutions through which savers can directly provide funds to borrowers. Time at which the loan will be repaid c) Buyer can hold the bond until maturity or sell it at an earlier date. Interest rate depends in part on its term. Probability that the borrower will fail to pay some of the interest or principal. Way the tax laws treat the interest earned on the bond. When state and local governments issue bonds and bond owners are not required to pa federal income tax on interest income. Claim to partial ownership in a firm b) Owner of shares is part owner while owner of bonds is a creditor.
