economic growth:business cycle

Potential gdp level of real gdp attained when all

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Potential GDP= level of real GDP attained when all firms are producing at capacity Saving, Investment and the Financial System Financial system= system of financial markets & financial intermediaries through which firms acquire funds from H Financial markets = markets where financial securities, such as stocks and bonds are bought and sold . Security = a document that states the terms under which funds pass from buyer of security who is providing funds to the seller Stocks= partial ownership of firms Bonds= promises to repay a fixed amount of funds Financial intermediaries= firms, such as banks , mutual and insurance companies borrow funds from savers and lend them to borrowe Financial system offers 3 key services for savers and borrowers - risk is the chance that the value of a financial security will change relative to what u expect - liquidity is the ease with which a financial security can be exchanged for money - information or facts about borrowers and expectation about returns Macroeconomics of Saving and Investment In a closed economy no trading Y = C+I+G I = Y-C-G Private saving (Sprivate) = Y+TR-C-T (income after paying tax and consuming) Public saving(Spublic) = T-G-TR Total saving is S= Sprivate + Spublic S = Y+TR-C-T +(T-G-TR)
Image of page 1

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

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern