Chapter 02 - Financial Assets, Money, Financial Transactions, and Financial Institutions
Problems and Issues1.In a recent year, the various sectors of the economy listed below reported the following netchanges in their financial assets and liabilities (measured in billions of dollars):Net AcquisitionsNet Increaseof Financial Assetsin LiabilitiesHouseholds$434.6$292.0Farm businesses2.7-2.5Nonfarm noncorporate businesses8.735.0Nonfinancial corporations84.9127.8State and local governments74.860.6U.S. government13.0236.3Foreign individuals and institutions150.729.0Federal Reserve System32.031.2Commercial banking256.0245.7Private nonbank financial institutions556.9590.7Using these figures, indicate which sectors were deficit-budget sectors (DBUs) and which were surplus-budget sectors (SBUs) for the year under study. Were there any balanced-budget sectors (BBUs)? Which sectors were the largest net lenders and the largest net borrowers during the year? For all these sectors combined, were more funds loaned or more funds borrowed? Why do you think there is a discrepancy between the total funds loaned and total funds borrowed?