Chapter 30 Financial Sector and the Economy

Chapter 30 Financial Sector and the Economy - C hapter 30...

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Chapter 30: The Financial Sector and Economy For every real transaction, there is a financial transaction that mirrors it. The financial sector facilitates trade making it possible for normal business to happen It also transfer saving – outflows from spending stream in hundreds of different forms Flows from spending stream are channeled into financial sector as saving when individuals buy financial assets – assets such as stocks or bonds, whose benefit to the owner depends on the issuer of the asset meeting certain obligations. Interest rates are the prices that are charged or paid for the use of a financial asset Long term interest rate is the price paid for the use financial asset with long repayment periods in the loanable funds market Short term interest rate is the price paid for the use of financial assets with shorter repayment methods such as saving deposits and checking accounts in the money market Money is a highly liquid financial asset that’s generally accepted in exchange for other goods, is used as reference in valuing other goods, and can be stored
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This note was uploaded on 02/23/2011 for the course ECON 2020 taught by Professor Coppock during the Spring '08 term at UVA.

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Chapter 30 Financial Sector and the Economy - C hapter 30...

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