Chapter 8 - Saving, Investment, and the Financial System Flashcards
Financial Markets
Financial markets are financial institutions through which savers can directly provide funds to borrowers.
Financial System
The financial system is the group of institutions in the economy that help to match one person’s saving with another person’s investment.
Bond
A bond is a certificate of indebtedness.
Stock
Stock is a claim to partial ownership in a firm.
Financial Intermediaries
Financial intermediaries are financial institutions through which savers can indirectly provide funds to borrowers.
Mutual Fund
A mutual fund is an institution that sells shares to the public and uses the proceeds to buy a portfolio of stocks and bonds.
National Saving (saving)
National Saving is the total income in the economy that remains after paying for consumptions and government purchases.
Private Saving
Private saving is the income that households have left after paying for taxes and consumption.
Public Saving
Public saving is the tax revenue that the government has left after paying for its spending.
Budget Surplus
The budget surplus is an excess of tax revenue over government spending.
Budget Deficit
The budget deficit is a shortfall of tax revenue from government spending.
Market for Loanable Funds
The market for loanable funds is the market in which those who want to save supply funds and those who want to borrow to invest demand funds.
Crowding Out
Crowding out is a decrease in investment that results from government borrowing.
