Chap18Savinginvestmentandfinancialsystem.pptVIP

Saving, Investment, and the Financial System;The Financial System ;Financial Institutions in the U.S. Economy;Financial Institutions in the U.S. Economy;Financial Institutions in the U.S. Economy;The Bond Market;Characteristics of a Bond;Stock represents ownership in a firm and is therefore, a claim to the profits that the firm makes. The sale of stock to raise money is called equity financing. Compared to bonds, stocks offer both higher risk and potentially higher returns.;The Stock Market;The Stock Market;Financial Intermediaries:Banks;Banks;Financial Intermediaries:Mutual Funds;Other Financial Institutions ;Saving and Investment in the National Income Accounts;Some Important Identities;Some Important Identities;Some Important Identities;Some Important Identities;Private Saving;Public Saving;Surplus and Deficit;Saving and Investment;The Market for Loanable Funds;The Market for Loanable Funds;The supply of loanable funds comes from people who have extra income they want to save and lend out. The demand for loanable funds comes from households and firms that wish to borrow to make investments.;The interest rate is the price of the loan. It represents the amount that borrowers pay for loans and the amount that lenders receive on their saving. The interest rate in the market for loanable funds is the real interest rate.;Supply and Demand for Loanable Funds;Loanable Funds (in billions of dollars);Government Policies That Affect Saving and Investment;Taxes and Saving;Taxes and Saving;S2;Taxes and Saving;Taxes and Investment;Taxes and Investment;An Increase in the Demand for Loanable Funds...;Government Budget Deficits and Surpluses;Government Budget Deficits and Surpluses;Government Budget Deficits and Surpluses;S2 ;Government Budget Deficits and Surpluses;Government Budget Deficits and Surpluses;The U.S. Government Debt;Summary;Summary;Summary;Summary;Graphical Review;Loanable Funds (in billions of dollars);An Increase in the Supply of Loanable Funds...;An Incre