Show:
Financial Intermediaries/System
Bond Market
Stock Market
Savings & Investments
Loanable Funds
100
a group of institutions in the economy that help match one person's saving with another person's investment
What is the financial system?
100
certification of indebtedness
What is a bond?
100
a claim to partial ownership in a firm
What is stock?
100
an economy that does not interact with other economies
What is a closed economy?
100
excess of government spending over tax revenue
What is a budget deficit?
200
financial institutions through which savers can indirectly provide funds to borrowers
What is financial intermediaries?
200
a bond that has non-taxable interest
What is a municipal bond?
200
average of a group of stock prices
What is a stock index?
200
tax revenue that the government has left after paying for its spending
What is public savings?
200
The market in which those who want to save supply funds and those who want to borrow to invest demand funds.
What is the market for loanable funds?
300
Ex: debit cards/checks
What is an example of a medium of exchange?
300
a bond that never matures but gains interest forever, the principal is never repaid
What is a perpetuity bond?
300
to raise money, called equity finance
What is the purpose of stock sales?
300
income that households have left after taxes and consumption
What is private savings?
300
A tax advantage to a firm building a new factory
What is investment tax credit?
400
when the mutual fund buys all the stocks in a given stock index
What is index funds?
400
the failure to pay back the interest or principle of a bond
What is a default?
400
the price of a corporation's stock divided by the amount the corporation earned per share over the past year
What is the price earnings ratio?
400
an equation that must be true because of the way the variables are defined
What is an identity?
400
Saving is the source of ____ of loanable funds and investment is the source of ____ for loanable funds.
What is supply and demand?
500
The financial system moves the economy's scare resources from _____ to ______
Savers to Borrowers
500
the probability that the borrower will fail to pay
What is a credit risk?
500
When a firm faces financial difficulty do bondholders or stockholders get paid first?
stockholders
500
In a closed economy if S=I, what are the three components of I?
I=Y-C-G
500
When the government reduces national savings by running a budget deficit the interest rate _____ and the investment _____.
Rises and Falls