Chapter 9 Flashcards
Saving
income that is not spent on the consumption of goods
Investment
the purchase of new capital goods
Four Major factors that determine the supply of savings
smoothing, consumption, Impatience, Marketing and psychological factors, Interest rates
Time Preference
the desire to have goods or services sooner rather than later
Markets for Loanable funds
savers trade with borrowers
Financial Intermediaries
entities such as banks, bond markets, and stock markets
Stock
A certificate of ownership in a corporation
Initial Public offering
the first time a corporation sells stock to the public
Bond Contracts
lists how much is owed, interest rates, etc
Default Risk
risk that the borrower won’t pay back the loan
Collateral
something that becomes the property of the lender
Crowding Out
the decrease in private consumption and investment that occurs when government borrows more
