Econ- Chap 8 - Overview-8 x Financial Markets and...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Principles of Macroeconomics: Ch. 13 First Canadian Edition Overview-8 Financial Markets and Intermediaries Saving and Investment Market for Loanable Funds Government policies that affect the economy’s savings and investment
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Principles of Macroeconomics: Ch. 13 First Canadian Edition Financial Markets. . . . . . are the markets in the economy that help to match one person’s saving with another person’s investment (spending). . . . move the economy’s scarce resources from savers to borrowers. . . . are opportunities for savers to channel unspent funds into the hands of borrowers.
Background image of page 2
Principles of Macroeconomics: Ch. 13 First Canadian Edition Financial Institutions in the Canadian Economy Institutions that allow savers and borrowers to interact are called financial intermediaries . Types of Financial Intermediaries : Banks - Bond Market Stock Market - Mutual Funds Other
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Principles of Macroeconomics: Ch. 13 First Canadian Edition Financial Intermediaries: Banks Banks take in deposits from people who want to save and make loans to people who want to borrow. Banks pay depositors interest and charge borrowers higher interest on their loans. Banks help create a medium of exchange , by allowing people to write cheques against their deposits.
Background image of page 4
Principles of Macroeconomics: Ch. 13 First Canadian Edition Financial Intermediaries: The Bond Market A bond is a certificate of indebtedness that specifies obligations of the borrower to the holder of the bond. Characteristics of a bond: Term : the length of time until maturity. Credit Risk : the probability that the borrower will fail to pay some of the interest or principal. Tax Treatment : The interest on most bonds is taxable income.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Principles of Macroeconomics: Ch. 13 First Canadian Edition Stock represents ownership in a firm, thus the owner has claim to the profits that the firm makes. Sale of stock implies “equity finance” but
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 23

Econ- Chap 8 - Overview-8 x Financial Markets and...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online