Lecture Notes Econ 2411win

Lecture Notes Econ 2411win - Econ 2411 10:56:00 Chapter 1...

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Unformatted text preview: Econ 2411 29/09/2008 10:56:00 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 • 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 Chapter 2 29/09/2008 10:56:00 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?...
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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 2411win - Econ 2411 10:56:00 Chapter 1...

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