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1 Written Assignment 3 Chapter 11-17 Written Assignment 3 By: Kelley Paletko Thomas Edison University 8/25/19
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2 Written Assignment 3 1. What is the role of the financial system? Name and describe two markets that are part of the financial system in the U.S. economy. Name and describe two financial intermediaries . The financial system helps one person’s savings with another person’s investment. In the US Economy, two markets that are part of a financial system are the bond and stock market. Bonds are certificates of indebtedness and stocks are some type of ownership of a firm. Two financial intermediaries are banks and mutual bonds- Bands take deposits from people who want to save to make loans to people who want to borrow. Mutual funds sell shares to the public and use the money to buy stocks and bonds. 2. What is the government budget deficit? How does it affect interest rates, investment, and economic growth? A government deficit is a shortfall of tax revenue from the government spending. If rises when the government spends more than the tax revenue. As a government budget deficit reduces national saving, it raises interest rates, reduces private investment, and thus reduces economic growth. 3. What benefits do people get from the market for insurance? What two problems impede the insurance market from working perfectly?
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