SAVINGFINSYSCLASS

SAVINGFINSYSCLASS - The Financial System and Long-Run...

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1 1 The Financial System and Long-Run Interest Rate Determination Role of the Financial System Direct finance: new issues of stocks, bonds Financial Intermediaries Banks, Mutual Funds, etc Secondary markets –resale – NYSE, etc Financial Regulation Saving, Investment, and Capital Loanable Funds Theory Long-Run Real Interest Rates Gov’t deficits and the debt 2 In the News? 3 Course Issues The End is Near Course Evals Essential Questions Review Guide Discussion Boards Consumption Function Fall courses Investment Game Unanswered Questions Stock market Why buy bonds
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2 4 Classical Review what determines output? Amount of capital, labor and resources what determines unemployment? Frictional and structural, NO cyclical what causes inflation? Too rapid growth in the money supply what are the determinants of real interest rates? Supply and Demand for loanable funds (Savings and Investment) what determines consumption? Real interest rates (since savings=f(real interest rate) and C=Y-S) what determines investment? Real interest rates
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This note was uploaded on 03/24/2011 for the course ECON 103 taught by Professor Lin during the Summer '08 term at Rutgers.

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SAVINGFINSYSCLASS - The Financial System and Long-Run...

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