Lecture Notes Econ 2411

Lecture Notes Econ 2411 - Econ2411 12:35 Chapter1...

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Econ 2411 12:35 Chapter 1 Financial Markets Markets in which fund are transferred from people who have an excess of  available fund to people who have shortage of funds Surplus savers -> deficit spenders Source of financing for capital investment and consumption spending The Bond Market and Interest Rates A security (financial instrument) is a claim o the issuers future income or  assets The Stock Market Common stock represents a share of ownership in a corporation Foreign Exchange Market The foreign exchange market is where funds are converted from one currency  into another The foreign exchange rate is the price of one currency in terms of another  currency Banking and Financial Institutions Financial Intermediaries – institutions that borrow funds from people who have  saved and make loans to other people Banks – institutions that accept deposits and make loans Other Financial Institutions – insurance companies, finance companies,  pension funds, mutual funds and investment banks Financials innovation – in particular, the advent of the information age and e- finance Money and Business Cycles
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Evidence suggests that money plays and important role in generating  business cycles Recessions (unemployment and booms (inflation) affect all of us Monetary Theory ties changes in the money supply to changes in aggregate  economic activity and the price level Money and Inflation The aggregate price level is the average price of goods and services in an  economy A continual rise in the price level (inflation) affects all economic players Data shows a connection between the money supply and the price level Aggregate Output GDP – market value of all final goods and services produced in the domestic  economy during a yr GDP Deflator = nominal GDP / real GDP Consumer Price Index (CPI) - measure of avg. change over time in the prices  paid by urban consumers for a market basket of goods and services Growth Rates Growth rate GDP growth rate Inflation rate
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Chapter 2 12:35 Chapter 2 Financial Markets Role and Functions: Indirect Finance Types Structure Financial Instruments Capital Money International Financial Intermediaries Types (x asset size) Role and functions Financial Regulation Reason for Regulatory agencies Who regulates whom? Function of Financial Markets
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This note was uploaded on 10/27/2009 for the course ECON 2411 taught by Professor Martel during the Spring '08 term at UConn.

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Lecture Notes Econ 2411 - Econ2411 12:35 Chapter1...

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